Blockchain: hyped concept or reality?
In my view, it is both. Blockchain is a reality; financial services and other industries have already enabled scenarios using the technology. In fact, Commerzbank and R3 Corda have partnered and prototyped trade finance and supply chain use cases on a blockchain platform.
Blockchain and bitcoin are the “Big B’s” dominating the tech world lately, and the more we hear about them, the more questions are raised:
- Is blockchain possible without bitcoin?
- What is the value of a blockchain without a bitcoin?
- How different is blockchain from a shared database?
- How would one be incentivized by using a blockchain?
Whilst plenty of articles address these questions and more, there are also numerous use cases that demonstrate what blockchain can enable. Here are just a few examples of what blockchain technology is likely to achieve:
- Multi-party collaboration
- Information balance
- Process optimization
- Transparency and auditability
- Security of information and digital assets
That sounds good, but what does it mean to the average person? Let’s take a hypothetical, empathetic approach and travel back 10-40 years. Here are some societal challenges that may not have occurred if blockchain had functionally existed:
The people of Africa would not have fallen victim to land fraud
Land fraud is a major issue in parts of Africa – the most common problem being double ownership of land. In Ghana, more than 80 percent of landowners lack title 60 years after independence, according to its land commission. Most land is usually held with oral agreements between subsistence farmers and land-owning chiefs.
With blockchain technology, this social challenge would not have existed. Blockchain would have:
- Provided a mechanism to securely store necessary data like contracts and assets
- Increased security, enabling digital transactions that cannot be manipulated
- Provided a mirror reflection of the government land registry systems.
Make every vote count
Elections are one of the greatest powers of modern society, and they are widely considered the most perfect form of government. Historically, numerous corrupt elections have diluted the value of democracy through violence, fraud, and bribery, resulting in lack of security and integrity and snatching away the notion of “by the people, of the people, and for the people.”
Blockchain voting could have revolutionized these events. Blockchain enables anonymous votes to reside as digital votes. As we know, blockchain is a distributed ledger that operates on multiple connected nodes. Every time a balloted is cast, the entire ledger is updated. Because the information is not stored in a centralized location, it’s virtually impossible to hack. Thanks to security technologies such as fingerprint and face recognition, voter identity can be ensured.
Terrorist financial networks
The impact of money laundering is staggering, with transactions totaling to up to $2 trillion globally. The IMF defines money laundering as “a process of conducting financial transactions in a manner that obscures the link between funds and their origin.” However, money laundering is more than just a financial crime – performed by criminals and terrorists to finance illegal activities, it also damages the global economy and threatens security.
In 2014, $3M was moved into the terrorist organizations every day, and these groups were able to scale through the Internet without leaving a trail. Can you guess what the sources were?
- Donations through charities
- Kidnapping and ransom
- Human trafficking
- Extortion, taxes, and checkpoints
- Control over natural resources
- Oil smuggling
Blockchain could this have limited and even prevented many of these illicit operations. Here’s how:
Blockchain as a payment medium is a pseudonymous, transparent system with a shared connected database, centralized by a single governing body that tracks the source of payments and the associated information. A blockchain-based AML platform makes it possible for regulatory authorities, risk officers, auditors, and other relevant stakeholders to monitor complex transactions in an automated and effective manner, and record audit trails of suspicious transactions across the system.
History would look very different had blockchain functionally existed years ago. Today, technology vendors have started to explore and execute scenarios using blockchain, and the value of the technology is gradually being proven.
At SAP, we are collaborating with customers and partners, exploring use cases, and building prototypes to make blockchain a reality and help customers differentiate themselves in their respective industries. To understand how SAP is partnering with its customers to enable blockchain, please visit here.