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Blockchain has its benefits, but can it live up to the hype?

Tamlin Magee | March 10, 2016
A variety of businesses are now experimenting with the technology.

First popularised outside of computer science circles with the crypto-currency bitcoin, blockchain is now grabbing the attention of just about everyone, from financial services to government.

Startups are beginning to promise the world, and Fortune 500 companies are at least keeping a close eye on the concept.

Understandably, there's plenty of confusion - just what does blockchain mean for business? What will and won't it be used for, and will it live up to the hype?

Blockchain: How can it be used by businesses?

The wide range of uses for blockchain is now "a world away from bitcoin", according to Lisa Moyle, head of financial services and payments at industry group techUK.

While the finance sector has been pushing the technology, there's now the potential for applications across plenty of different sectors.

That could include new forms of clearing and settlement, as well as supply-chain finance. And Everledger, for example, uses blockchain to guarantee the provenance of diamonds.

"The challenge is to test these use cases against the current regulatory framework and understand real-world viability in terms of cost, suitability and efficiency," Moyle says.

Governments are exploring the potential for blockchain in running secure and cost-effective services. "Things like land registry, tax collection, or confirming the validity of government documents," Moyle says.

Indeed, earlier this year Sir Mark Walport, Britain's chief scientific adviser, recommended the National Health Service use a form of blockchain technology for its databases and record-keeping.

"It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust," he said at the time.

Blockchain: A new system of record

As blockchain enables peer-to-peer transactions with a great deal of trust and transparency, the idea is it could prove useful for any industry where multiple parties require a common record - think payments, or insurance, where the internet of things and connected devices are playing a bigger role.

An example: IBM's blockchain VP Jerry Cuomo imagines a world where you're only liable for your car insurance when you're on the road and driving.

By distributing information through a blockchain, it would be possible for all parties to agree exactly when a car was on the road. If a car had automatic parking software, the record created by blockchain could determine when the driver was in control, and when it was the software - using the record to identify who was liable at that time.

According to a recent report from Deloitte (PDF), there are three key characteristics to blockchain that make it a desirable technology across industry. First, it's almost impossible to tinker with the blockchain without it being noticed, making fraud very difficult.

 

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