By Sreedevi Gogusetty, Nitesh Sharma
Most enterprises/organizations use a third-party ledger on a daily basis – even if they don’t realize it. It could be your credit card company recording your purchase of a cup of coffee, StubHub recording your purchase of a concert ticket or Apple iTunes recording your purchase of a movie. Buyers and sellers use intermediaries because they may not trust the other party, but they trust that the intermediary will assure the transaction is completed faithfully. However, this trust comes at a cost as each of these intermediaries charge the buyer or seller a fee to maintain a ledger of who owns what.
Think about the transfer of information. Think about real estate for example. Who records the change of property ownership & land rights when an individual buys a new home? Where are these records stored? In this case, the transaction records are kept by local government authorities who record all the important information pertaining property ownership, land size and legal rights. If government records didn’t exist, how would a home owner prove they own the property? With no repository of trusted records, anyone could potentially claim ownership of anything.
But what if there was a way of making a transaction that didn’t require the use of a trusted intermediary? Imagine direct business to business or peer to peer transactions. No banks, no government, no intermediaries of any kind. This is what blockchain could potentially achieve.
After the cloud, blockchain could be the next big platform to drive enterprise digital transformation. Blockchain technology emerged a few years ago as part of the Bitcoin revolution, fueling the cryptocurrency movement and making the Bitcoin a legitimate success due to the possibility of undertaking fast and secure transactions. Of late, however, blockchain has broken away from Bitcoin and is coming into its own identity as a promising technology that can transform the enterprise in several ways.
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Functionally, a blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” For use as a distributed ledger a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.
“In a nut shell, blockchain technology tries to ensure provable data immutability by using hash functions and digital signatures”
Let’s understand with most common usage now days i.e. fund transfer/ money transfer:
Blockchain use cases are Lightweight financial systems, Provenance tracking, Inter-organizational record keeping, and Multiparty aggregation.
Banking sector: Asset registry & tracking, Asset re-hypothecation, Know Your Customer (KYC), Payments-b2b, b2c, p2p, Smart wallets, Syndicated loans, Trade finance.
Insurance sector: Agent Details Registry, Fraud Repository, National Policy & Claims Records, Unclaimed Life Insurance Ledger, Verified Health & Policy Records and Verified KYC Data.
Other financial use-cases: Asset backed virtual currencies, Clearing & settlement, Corporate finance book-running, Depository receipts, Escrow, Fund portfolio management, Payment gateway, Peer-to-peer trading, Regulatory reporting, Securities servicing, Securities trading, Securities settlement.
Government: Record authentications and verification of academic records, accounting records, birth certificates, business ownership records, copyrights, health records, identity documents, national ID, police & court records, regulatory records, property records, vehicle records.
Others: Auctions, Contract management, Identity management, Secure documents, Supply Chain Management, Voting.
Blockchain can minimize fraud and maximize efficiency, security & transparency in supply chains, healthcare, global money systems, financial technologies, democratic elections, auction of public assets, energy trading, electronic record authentication, delivery of Government services, IoT and much more.