Understanding Blockchain technology and its applications

Posted by Naomi Desjardins-Kaci, Present 01-04-2020 03:20 PM

Are you one of those for whom blockchain technology is still rather abstract? If so, I strongly recommend this article since blockchain is one of the technologies to watch for in the coming years. In fact, it could even revolutionize several industries, including banking and insurance.

The blockchain: a shared and secure information channel
Imagine a very large notebook that everyone can read for free and freely, on which everyone can write, but which is impossible to erase and which is indestructible. That’s basically what the blockchain is:

’’The blockchain is a technology for storing and transmitting information. In particular, it has three major characteristics: it is transparent, it is secure, and it works without central control.’’

In fact, it looks like a large database that contains the history of all the exchanges made between its users since its creation. Its main characteristic is its decentralized architecture. Indeed, the blockchain is not hosted by a single server, but by a part of the users. There is therefore no intermediary on the blockchain. Each user can check the validity of the chain himself. The information contained in the blocks is protected by cryptographic processes. Once information is entered, it is therefore impossible to change or delete it. The blockchain contains a secure and verifiable record of every transaction that has been carried out.

Its origin
Blockchain technology enjoyed great popularity in 2008 with the virtual currency called Bitcoin by a person or group of people known as Satoshi Nakamoto, but whose true identity remains unknown to this day.

Private blockchain vs. public blockchain
The difference with the public blockade is its degree of openness. Indeed, the public blockchain can be consulted by everyone. This means that every user can send transactions to it. In other words, everyone can join and participate freely in the approval process (the one that decides which block will be added to the chain and defines the state of the system). For their part, private blockchains are widely used by companies for experimentation. The approval process is controlled by a limited and selected number of nodes.

For example, about 15 financial institutions could agree and organize a blockchain in which a block would have to be approved by at least 10 of them to be valid. There is thus a double modification to the original system, since not only are the participants in the approval process limited and selected, but also the rule of majority is no longer required. The right to read the blockchain, i.e. access to the registry, may be either public or reserved to the participants in the network. A private blockchain can run behind a corporate firewall and even be hosted on site.

Useful in a variety of areas
The blockchain may seem rather abstract, yet the fields of exploitation are numerous. Be it in the health sector, distribution chains, transport, the financial and insurance sectors, accounting, law and so on.

Among the various fields of application, insurance is undoubtedly one of the most advanced sectors. Many use cases have already been deployed and are now operational.

Certainly, the computer technology of the blockchain has huge potential for development through its possible applications. But, before making the blockchain a reality for your company, it is important to consider the various risks related to your project as well as its costs. Creating and deploying enterprise blockchain solutions remains a huge task that a company cannot tackle alone.

Naomi Desjardins-Kaci, Present.