This year blockchain will continue to emerge and mature in terms of scalability, verifiability, manageability and auditability. Understanding blockchain platforms, emerging business models and processes will be critical to success. So, Waracle’s Marketing Manager Caroline McClelland, decided to interview Iona Murray at Wallet.Services to bring you everything you need to know about blockchain. Iona is the Marketing Manager and leads on all Wallet.Services marketing strategy and is a bit of a technology and blockchain evangelist herself having started her career with Microsoft a few years ago.
First of all, what is bitcoin and blockchain technology?
Blockchain is a distributed ledger technology. My simplest explanation of ledger technology is that it is a data structure, instead of resting with a single provider, shared among a distributed network of computers. Like a spreadsheet that is duplicated thousands of times across a network of computers, ledger technology creates an immutable record of all data transactions across the network – hence the term “ledger”.
The result is a more open, transparent and verifiable system that will fundamentally change the way we think about exchanging value and assets, enforcing contracts and sharing data.
Bitcoin was blockchain’s proof point. It’s a cryptocurrency that transacts millions of dollars’ worth of cryptocurrency a day.
It’s important to distinguish between public and private blockchain networks however:
Are we best to talk about blockchain in general, or bitcoin?
Blockchain. Bitcoin is only one application of blockchain, and to focus on it is isn’t celebrating the true potential of blockchain tech.
Blockchain is a transformational technology with the potential to extend digital transformation beyond an organisation’s walls, and into the processes it shares with suppliers, customers and partners.
For the individual, blockchain can secure and simplify the process of voting online, paying taxes, applying for a mortgage or opening a bank account. For society, it secures record keeping and sharing for and between local authorities, government agencies, banks and businesses. On a global level, blockchain is needed for international collaboration on environment, security and trade.
Similar to mobile app development, the opportunities really are endless, and the best blockchain applications have yet to be thought of!
Why’s it called blockchain?
Because the structure of the tech is literally blocks arranged in chains! The ledger contains a continuous and complete record (the “chain”) of all transactions performed which are grouped into blocks. Each block contains an encrypted hash of the previous block, tying the chain together. It’s these hashes that make it impossible to change or remove blocks, as then the chain simply won’t tie together.
How secure is blockchain?
Data contained on the blockchain is cryptographically secured, so it is mathematically implausible to cheat and expose the data.
Each user of the network has a private and public key. Unsurprisingly, it’s a user’s public key that is shown to the network, and the corresponding private key is kept hidden by the user. The combination of both these keys creates a unique digital signature on every transaction, keeping everyone accountable.
Think of a username and password: the username is what is recognisable to the network, and the password is what you keep to yourself to access the network. But people can often find ways of transacting on regular networks without necessarily being held accountable. It’s the digital signature in blockchain networks that is the added level of security – as it allows all transactions to be traceable (depending on the rules of the network).
These sort of security characteristics are quite unique to blockchain, and are some of the reasons why it’s getting so much attention.
Can you tell us more about Satoshi Nakamoto?
He/she is the supposed creator of Bitcoin, so in turn blockchain technology too. They have a few thousand bitcoin, and with the well known increase in bitcoin value they are worth billions. They’ve never spent any though! The public have never actually seen/heard from them, they pretty much went into hiding after the establishment of the bitcoin network. It’s a great story. I mean who knows, our CTO Alan could be Satoshi on the sly?
How do the rules of bitcoin work?
The bitcoin network is a big competition – the aim of the game being to get the next bitcoin on the blockchain.
In a public network such as bitcoin, a block is only added to the chain if the nodes, which are members in the blockchain network, reach consensus on the next ‘valid’ block to be added to the chain. In order to determine the validity of a transaction, the nodes must solve a highly complex algorithm to verify the relevant transaction (on the bitcoin network this is known as the ‘Proof of Work’). Only once it has been verified can a transaction form part of a block and that block be added to the blockchain. The first node to solve the algorithm and validate the block is rewarded with bitcoins. Therefore, it’s referred to as “mining” – because nowadays the winners really do strike gold!
There are other mechanisms to determining the validity of a transaction in blockchain networks: such as Proof of Stake, Proof of Authority etc. They all offer different approaches to reaching consensus, and it should be the situation which determines the approach to take.
What’s the most simple use case?
Probably the example of transacting money, as this is something almost everyone has had to do (for shopaholics like me, you might do it a few times a day.)
When data is put on to the blockchain, in this example a money value, it’s as real as having the cash. The data is secured and can’t be copied or spent more than once. Only the intended user can decrypt the data, so spend the money, and a record of all transactions is kept in a tamper-proof ledger. In this case, there is no need for a middle man such as the bank, to check if the sender has the appropriate funds or if the recipient is who they say they are.
Is the financial services industry the most common use case?
At the moment yes, just because of blockchain’s history with cryptocurrencies and so the fintech sector is an obvious connection. However, I think we’ll start to see more focus around blockchain in other industries as more opportunities for its application are discovered.
There are so many cool opportunities – what do you think is the most exciting?
Blockchain’s application in the public sector is the most exciting. If you take Estonia as an example of digital public services – we’d be able to do our tax returns, apply for a passport, and open a bank account all online with ease. Every citizen in Estonia has a digital ID which follows them in every interaction they have with government. Unlike paper-based processes here in the UK, this joins up all of their different public services, and ensures they are quick and efficient.
When speaking with the Estonian ambassador to the UK on digital identity and free movement of data, Tiina Intelmann, she argued that if we as citizens have a digital identity number which we use to open a bank account in Estonia – why not in Portugal too? We think big in the EU when it comes to free movement of persons and goods, but not data. Of course, there are security implications that come with this…but that’s where blockchain comes in!
Also, the Everledger use case: using blockchain to track diamond ownership is pretty cool. Maybe I have a conflict of interest here though, as I find anything to do with diamonds exciting!
Which countries are leading the way in terms of blockchain systems?
Well Estonia, of course – with talk about releasing their own national cryptocurrency estcoin.
Switzerland – because of the provenance of blockchain startups, one densely populated region is actually referred to as Crypto Valley.
Dubai hopes to establish themselves as a destination for innovative startups, a lot of which are focussed on blockchain tech. Along with this, their Land Department are building a real estate register system on blockchain.
And Scotland. Through Wallet.Services work on the Scottish Government DLT strategy we have kicked off a number of use cases for blockchain around the country. For example, Citylets is going to pilot blockchain to monitor rent rate increases to evidence for or against rent controls. In this case, landlords can steadily increase rent and due to the unavailability of data, councils have a tough time regulating this. This approach should mean that tenants get a fairer renting experience.
How can blockchain be used in healthcare to be a more secure system for managing medical records?
Estonian-based company Guardtime have been tracking changes to citizens’ healthcare record on a distributed ledger for years. This means that all updates, including checks, on medical records have been recorded and can be traced to an individual or organisation – so if an insurance company has looked at your medical records in Estonia, there is a record of this.
As a step further, if the medical records were originally stored on the blockchain itself this would mean that they were cybersecure and it would be almost impossible for unauthorised users to view a person’s medical record. Also, privacy and confidentiality would be assured as blockchain can eliminate overexposure of our medical records between the different health authorities. Digital health and blockchain go hand in hand.
Is blockchain going to become the gold standard?
I believe so yes. The general consensus is that: 2017 was the year of pilot, and 2018 is the year of production. Watch this space!
Wallet.Services is a global company, rooted in Scotland. The team aim to streamline, simplify and secure digital life by accelerating the use and harnessing the benefits of blockchain technology across society. The company was co-founded by three directors in 2016, and is still relatively young! The SICCAR solution, built in collaboration with Scottish Government, streamlines, simplifies and secures digital life with blockchain to protect data and the people and organisations that own it.
Waracle is Scotland’s mobile and digital products specialist. We are the UK’s largest mobile app and internet of things (IoT) company with a team of designers and developers who are experts in voice control and augmented reality technology and all things mobile. Our work across many sectors earns us recognition as a top app developer by independent research companies Clutch, AppIndex and Carnival.
Creating mobile apps for Clydesdale Bank, ScottishPower/Iberdrola, Sainsbury’s Bank, NHS, Scotrail, Scotmid, Peak Scientific, Waracle is a trusted digital transformation partner. Our digital products, allow people easy access to services such as mobile banking and mobile energy apps giving people better control over their finances wherever they are.
We believe that new technologies such as the IoT, AI, voice control, AR and blockchain will have profound ramifications for businesses seeking to provide a competitive differentiator. If you’re a brand or business committed to rapid innovation and are keen to understand the consequences of these new and emerging technologies, then contact us or to learn more about the top 5 mobile trends, why not download the free Whitepaper?