Let’s give you four examples that blockchain is the latest in business collaboration.
The Blockchain is on everyone’s lips and in many industries subject of more or less advanced projects or test phases. This is mainly due to the high technological level of decentralized technology . And the fact that incidentally, the costs can be reduced and new sources of revenue can be tapped.
David Schatsky of consulting firm Deloitte believes that versatility is the big selling point of blockchain technology when it comes to adapting to specific business needs. “However, the impact Blockchain will have on companies in all industries is still not fully understood,” says Schatsky. And thus shows up with a current Deloitte study . Given this belief, blockchain technology will become a central business issue in many industries this year.
For this purpose, the consultancy has interviewed 308 senior decision-makers on senior executive level on the subject. The participants came from companies and organizations with an annual turnover of at least $ 500 million. The results: For many, the blockchain is actually high on the list of priorities:
- 36 percent believe blockchain has the potential to improve system operation – either by decreasing costs or increasing speed
- 37 percent consider the security features of the blockchain as their main advantage
- 24 percent believe that technology promotes the establishment of new business models and sources of revenue
“Honestly,” comments Schatsky, “there is still some uncertainty in the industry about the real potential of the technology , and while blockchain is among the top five priorities in more than a quarter of respondents, it does After all, one third considers the technology overhyped.
Those who already use Blockchain, on the other hand, report a completely new form of independence. The ability to transfer both data and money in a secure manner creates a whole new business dynamic.
The Blockchain makes a large part of the accounting superfluous. The latter can be particularly complicated in transactions involving multiple parties. So Blockchain’s revolutionary potential can not be underestimated, as Saurabh Gupta of IT service provider Genpact knows, “Blockchain and the concept of a decentralized database could provide a way to integrate accounting across the business.”
The operation of Blockchain
Blockchain will become the key technology in IT in the years to come.
The transaction is the basic element of the blockchain. Two parties exchange information with each other. This may be the transfer of money or assets, the conclusion of a contract, a medical record or a document that has been stored digitally. Transactions work in principle like sending emails.
The verification verifies that a party has the appropriate rights for the transaction. The check is instantaneous or it is written to a queue which will later check. At this point, nodes, ie computers or servers in the network, are integrated and the transaction is verified.
The transactions are grouped into blocks, which are encrypted with a hash function as a bit number. The blocks can be uniquely identified by assigning the hash value. A block contains a header, a reference to the previous block and a group of transactions. The sequence of linked hashes creates a secure and independent chain.
Before the blocks are generated, the information must be validated. The most widely used concept for validating open source blockchains is the “proof of work” principle. As a rule, this method represents the solution of a difficult mathematical task by the user or his computer.
The term mining comes from the mining industry and means the “mining”. In this process, the block is generated and hashed. To get to the train, the miners have to solve a mathematical puzzle. Whoever has the solution first, will be accepted as a miner. The miner receives for his work a Honroar in the form of crypto currency (Bitcoin).
After the blocks have been validated and the miner has done his work, the copies of the blocks in the network are distributed to the nodes. Each node attaches the block to the chain in a steady and unmanipulatable manner.
When a dishonest miner tries to change a block in the chain, the hash values of the block and subsequent blocks are also changed. The other nodes will recognize this manipulation and exclude the block from the main chain.
Smart contracts instead of middleman
Blockchain technology enables automated business contracts (so-called ” Smart Contracts “). The peer-to-peer database first captures the terms of the contract and then uses the data distributed to individual nodes to verify that these conditions are met and that a payment can be authorized.
Recently, IBM, AIG and Standard Chartered Bank have announced a pilot project to modernize one of the most complex contract types in the insurance industry: a multinational policy.
To this end, the companies created a master copy, which was written in the United Kingdom and three insurance policies from the United States, Singapore and Kenya integrated into a smart contract . It is based on blockchain technology that provides a common view of policy data and real-time documentation.
What’s up with Blockchain, Bitcoin and Co.?
Another cryptocurrency based on the blockchain principle. Provides a platform for programmable smart contracts. The “ethers” are regarded by fans as a legitimate successor to the Bitcoins (see also above picture).
Microsoft Azure cloud-built service that allows users to put external data into a blockchain without destroying their security and integrity. As an individualized middleware, cryptlets can also be developed by Azure users themselves – in any programming language – and build the bridge from the blockchain to new business services in the cloud.
Digital money, without coins and bills. Cryptography builds a distributed, secure and decentralized payment system. Does not require banks, but computing power and technical aids such as the blockchain.
A blockchain is a distributed database that maintains an ever-growing list of transaction records. The database is extended chronologically linearly, similar to a chain, at the lower end constantly new elements are added (hence the term “block chain” = “block chain”). If one block is complete, the next one is created. Each block contains a checksum of the previous block.
The blockchain technical model was developed as part of the cryptocurrency Bitcoin – a web-based, decentralized, public accounting system for all Bitcoin transactions ever made.
A globally available decentralized payment system and the name of a digital monetary unit. You do not need a bank to handle Bitcoin payments – everything is done through a peer-to-peer network of computers and the blockchain as the central database.
The open source software validates the entire blockchain and was released in early 2009 by a certain “Satoshi Nakamoto” under the name “Bitcoin”. Bitcoin Core was in C ++ soon to be programmed especially for Windows systems. A little later the porting to GNU / Linux followed. Because the developers are divided, there are now some derivatives of Bitcoin software, including Bitcoin XT, Bitcoin Unlimited or Bitcoin Classic.
The “scalable blockchain database” can manage up to one million writes per second, store petabytes of data, and still have a latency of less than a second – all managed in a decentralized manner and with the highest data integrity. The technical basis is blockchain technology.
Financial term for “distributed account management”. Bitcoin is a completely new technical approach to distributing information about specific assignments. There is no longer a classic account managed centrally at a bank, but “account management” is based on a network of communicating systems.
A computer log that can depict or review contracts or provide technical support for negotiating a contract. Could in future replace the written contract.
The startup R3 CEV builds the blockchain-based “Global Fabric for Finance”. With around 50 financial partners, the largest block chain in the world to be developed – a first test run with eleven banks, including Barclays, Credit Suisse, HSBC, UBS and UniCredit has already been successfully completed. R3CEV has entered into a strategic partnership with Microsoft to develop blockchain infrastructure and technology in the Azure Cloud.
A free software with which every user can develop their own blockchain application.
An open source protocol for a payment network – currently under development. P2P payment method and foreign exchange market in one, based on the cryptocurrency “XRP”. However, ripple users are not set to this one currency, but can use any currency – including euros, dollars or yen, for example.
The solution is designed so that multiple parties – such as brokers, regulators or auditors – can work together more effectively and efficiently across the network – says IBM . Thus, all parties can equally access the data and documentation to make meaningful decisions at any time based on trusted data. The advantages of blockchain technology are clear at this point:
- Ability to track events and payments related to the policy in each country
- Neither party may modify, delete or access the information collected without the consent of others.
- Reduced risk of errors and fraud through a high level of transparency
Blockchain-based smart contracts can also be used to automate payments between financial institutions. Accenture recently stated in a report that the infrastructure costs of eight out of the world’s ten largest investment banks could be reduced by an average of 30 percent. Expressed in figures, the annual savings potential for each of these banks would be around eight to twelve billion dollars.
Payments, approvals, and settlements are, in addition to the stock market, the areas of financial services that are peppered with inefficiencies, because each organization has its own data and needs to consult with others about which phase of the process they are in at the moment. Therefore, a comparison usually takes two days to complete. On the other hand, payment delays force banks to put money aside that could otherwise be invested.
The ability to share data in real-time with all other organizations through the Blockchain database virtually eliminates the need for counseling and reinsurance, making Accenture more efficient and effective.
Database instead of transaction fees
Most payment systems are administered by financial institutions. When money flows between companies, it is usually associated with fees – especially for small, medium and medium-sized businesses.
Large companies have benefited from the benefits of the global market thanks to their capital and power of influence so far, have been able to absorb or reduce transaction fees and enforce intellectual property protection. With the help of the blockchain technology now equal conditions for all are to be created. At the same time, SMEs should be enabled to enter the market on a global scale.
The B2B payment service Veem, for example, uses Blockchain to offer its SME customers – system-internal – toll-free transactions. By comparison, larger US banks charge around $ 50 per bank transfer.
Veem CEO Marwan Forzley sees Blockchain as an opportunity to eliminate the middleman in international transactions. Because this has a direct influence on the payment transactions to the contractors, what their timing and the fees that are incurred, concerns. So directly influence on what in the end stands for the SME’s bottom line. ”
More security for patient data
The electronic collection of patient data has undoubtedly helped to build centralized systems that allow this information to be shared internally. The problem here is that these systems and platforms are not designed for external exchange and prevent a standardized cross-organizational exchange. However, the healthcare industry could use decentralized blockchain technology to pre-authorize patient data sharing.
Already last year, MIT Media Lab and the Beth Israel Deaconess Medical Center launched a pilot trial that shared patients’ medications through a blockchain-based database called MedRec . The technical basis for “MedRec” was the Ethereum platform .
But the healthcare industry is also facing other problems – especially when it comes to health insurance and related payments. Gene Thomas, CIO of Gulfport Memorial Hospital puts it in a nutshell: “If there’s one area in the healthcare industry where Blockchain can really make a difference, then hopefully in terms of costs and billing.”
The findings of Deloitte fit well into the picture: The healthcare industry is therefore the most aggressive Blockchain deployment plans: 35 percent of respondents plan to roll out until next year.
Microgrid instead of electricity providers
It is one of the most cited examples when it comes to the uses of Blockchain in practice: the ” Brooklyn Microgrid ” in New York. This supplies the residents with (renewable) energy. But users can also sell surplus solar energy to their neighbors. All parties involved are on the safe side – thank the Blockchain .
The Siemens Digital Grid Division is responsible for the installation of the Microgrid . It includes network control systems, converters, smart meters and storage in the form of lithium-ion batteries. Thanks to the latter battery technology, users will continue to be supplied with energy even in the event of a large-scale power outage – such as in 2012 after Hurricane Sandy.
The project is supplemented by a blockchain database realized by startup LO3 Energy . It is a web-based accounting system that uses cryptography to ensure favorable electricity prices on the one hand and manipulation security on the other. Billing and payment are made directly between producer and recipient without an intermediary supplier. In this scenario, brokering via municipal utilities, energy suppliers or electricity price comparison portals is superfluous.
Meanwhile, about 50 parties use the “Brooklyn Microgrid” – including private individuals, a school, a gas station, a fire station and some factories. All participating parties can trade small amounts of green energy among each other. The prices are determined in automated auctions. These are based on the highest working price that an energy consumer is willing to pay.
The model of Microgrid in Brooklyn could in future also operate companies that want to reduce their electricity costs with the help of blockchain technology.