Ledgers are evolving in another way, they are becoming distributed, shared among thousands and sometimes millions of computers.
Last year, the UK’s chief scientific advisor called on that country’s government to be at the forefront of exploiting blockchain.
While blockchain can guarantee the trustworthiness of a piece of data in the distributed ledger, it is still cannot fully eliminate the errors that might happen outside the system.
The next big leap in technology is coming from an unexpected source— ledgers.
Ledgers have been a mainstay of commerce for millennia, recording the history of human transactions in a variety of media— from clay tablets, to papyrus to paper.
With the advent of computing, ledgers were digitised. And now ledgers are evolving in another way, they are becoming distributed, shared among thousands and sometimes millions of computers.
This is blockchain technology. This technology is perhaps best known as underpinning such cryptocurrencies as bitcoin.
This association with bitcoin has sometimes had a tainted connotation. However, blockchain seems to be finding a second life and a destiny that might be grander than bitcoin.
Industry experts and analysts seem to agree that blockchain will instill trust in transactions, especially those that are occurring online.
“Blockchain will do for trusted transactions what the Internet did for information,” says IBM chief executive, Ginni Rometty.
She was speaking last week at the IBM Interconnect Conference, an event where one of the main buzzwords has been blockchain.
Her view is very far from unique. In fact, everyone from governments to charities has been looking to tap into blockchain for the next technological solution to the world’s more puzzling problems.
Last year, the UK’s chief scientific advisor called on that country’s government to be at the forefront of exploiting blockchain.
“Distributed ledger technology has the potential to transform the delivery of public and private services,” said Sir Mark Walport.
So why is everyone so excited about blockchain technology?
One of the key reasons is that technologists expect blockchain to be the answer to the dicey question of the Internet age: how do I know you are whom you say are?
Because a blockchain is essentially a distributed ledger, any datum logged is nearly impossible to delete or manipulate.
To do so, one would need the consent of the owners of all the computers in a blockchain network.
Say for instance that when an individual, Sarah, was born her date of birth, her name, and her place of birth were recorded in a blockchain that was accessible to the ministry of education, the taxman, the hospital, Sarah’s parents and a number of other actors.
It would be nearly impossible for Sarah to ever fake her birth date, make herself just slightly older to qualify as a voter or just slightly younger to stay longer in a government position. To do this she would have to delete every copy of her information from every computer that held that data.
The implications of such a system are staggering as are the business opportunities for early adopters.
On Monday last week, Toronto-based online security company SecureKey and IBM announced that they were working on a digital identity network that will be launched later this year for use in Canada.Accessible through a mobile application and underpinned by blockchain technology, the product will give users the ability to verify their identities when opening new bank accounts, applying for new licences or paying for utilities online. However, consumers will retain control of how much data can be shared and with whom.
For countries like Kenya, the possibilities of such a system are endless. Due to data fragmentation, the government has a relatively loose grasp on the identities and locations of its citizens.
In fact, technology such as what SecureKey is using in Canada are not too far away from Kenya. Last year, the government said that it was working with IBM to develop blockchain technology for the management of records in healthcare and education.
The case for the education sector is simple. Upon enrolment demographic and biometric data on every student would be recorded in blockchain. This record would be updated as the child moved up through the educational system meaning that it would be too difficult to go back and erase or manipulate previously entered data.
Regulators, IBM says, ought not be a problem in the application of blockchain outside of cryptocurrencies. The company even goes so far as to argue that the sort of trusted transactions should appeal to and draw financial service regulators rather than repel them.
“The process of trading becomes transparent even to government. They can see everything that is happening in the markets,” said Dr Cao Yin, a founding partner of Energy-Blockchain Labs, a company that uses the technology to manage carbon trading in China.
While the identities of persons may be especially crucial for government and banks, companies are also concerned with the identities of objects.
A perfect example to illustrate how the identity of an object might be important is the diamond industry.
A diamond’s value is tied to its provenance. It may be illegal to trade a diamond depending on where it was mined. A diamond’s previous owners might also affect how we view its value.
For centuries, the diamond industry and governments have tried to keep track of provenance via paper records or digital records.
But there has always been a possibility of forgery because individual companies, if not people, had guardianship over this data.
This is where blockchain comes in. A digital identity for a diamond could be created and this data could be linked up to every step of a diamond’s journey. And if all this information could be shared in distributed ledgers, cases of forgery and trade in blood diamonds could be significantly cut down.
This is precisely what tech start-up Everledger does. And the company says it is now looking for more general applications of its technology in areas of financial services.
“One of the most exciting places where we are going … is the insurance industry. To bring together the identity of an object and its insurance,” said Everledger founder and chief executive Leanne Kemp.
She argues that providing digital identities for objects would make it easier for insurers to have a clearer image of the value of objects which they cover, be they cars or diamonds.
But perhaps the most relatable and accessible applications of blockchain is supply chain management. Much in the same way that a diamond can be tracked, so can a mango or a piece of pork. This tracing of products is a way to ensure consumer confidence in food safety.
For companies it also a way to maintain indelible records of their processes. Blockchain is being used by America’s largest retailer, Walmart to track food. Two weeks ago, Danish shipping giant Maersk said it was going to adopt blockchain technology to manage the vast supply network of its cargo business.
The tech industry is wont to latch on to ideas with a sometimes dangerous optimism. While blockchain can guarantee the trustworthiness of a piece of data in the distributed ledger, it is still a technology that cannot fully eliminate the errors that might happen outside the system.
That is to say, had Sarah’s mother or doctor entered the wrong birth date into the government’s distributed ledger of citizen identities, then Sarah would be followed around by a wrong birthday for the rest of her life unless those in control of the network consent to change.
