Over the past few months, I have been seeing more headlines about blockchain’s potential to disrupt several industries because of the multitude of types of information or data that it can be used for. Some of the various uses include financial transactions, public records, legal agreements, intellectual property, keys, degrees, and certifications, just to name a few.
Blockchain makes the sharing of information secure and reliable by creating shared databases of information that are continually compared and reconciled to ensure validity of all of the information that they contain. As a result, the creators believe that it lacks some flaws that make existing databases susceptible to either corruption or hacking, since the information is shared in a widely distributed manner. So, when a transaction of any type is initiated, it is validated through a peer-to-peer network by nodes that serve as gatekeepers. Once this information is validated, the database is updated to recognize the information as validated. Similar to the internet, since there are multiple nodes and copies of the information, blockchain should prevent failure or corruption of the information. Currently, one of the most recognizable forms of blockchain is Bitcoin, a virtual currency that exists only in the digital realm and is not regulated or controlled by any central bank, but can be accepted as payment since it can be transferred between parties because of validation and assigned value.
Blockchain has the potential to change the way that information is shared and potentially break down the barriers or the cost in tracking, validating and sharing information in its current form. The goal of the creators of blockchain is to establish a truly public, decentralized database of information and transactions that allows for near instantaneous validation and completion of the information. This could eliminate excuses from vendors that they lost an invoice, prevent disputes between parties over which version of a partnership agreement is the most current version, or create near instant visibility into the status of critical components in a supply chain. The creators believe that the uses are limitless and should enhance everyone’s ability to complete transactions of any kind. An article from the Harvard Business Review states that “Blockchain is a foundational technology: It has the potential to create new foundations for our economic and social systems. But while the impact will be enormous, it will take decades for blockchain to seep into our economic and social infrastructure. The process of adoption will be gradual and steady, not sudden, as waves of technological and institutional change gain momentum.” While all business should be aware of the potential impact, you probably don’t need to convert your contracts to being blockchain compatible – yet.