Spend Matters' article Why Bitcoin’s Blockchain Technology Could Revolutionize Supply Chain Transparency does a really nice job explaining blockchain, which the technology behind the online currency Bitcoin.
Key quote describing blockchain:
... blockchain is a shared, distributed ledger — really a new type of database structure — that runs without a single centralized operator. It is a secure, public and external system of record that participants can inspect, audit and update, and within it, all transactions are recorded.
Information stored in the blockchain system is boiled down into a code or “hash.” If someone tries to change the information, the hash will appear different, making it easy to detect any foul play.
This transparency provides a security layer that is designed to prevent anyone from altering information being exchanged via blockchain, which is why everyone is excited about its use for transactions.
In the case of the Spend Matters article, the focus is on using blockchain to bring greater transparency and security to global supply chain transactions. And they're pretty excited about it:
... blockchain could become a new “supply chain operating system” based on its decentralized architecture, which “has the potential to trigger a new wave of innovation in how supply chain applications are developed, deployed and used.
But blockchain can also be applied to a wide range of other applications, everything from property management to contracts - pretty much anything where a secure, transparent, trust-able record would be useful.
Or at least that's what the Economist says in their article The great chain of being sure about things. Key quote:
... the cryptographic technology that underlies bitcoin, called the “blockchain”, has applications well beyond cash and currency. It offers a way for people who do not know or trust each other to create a record of who owns what that will compel the assent of everyone concerned. It is a way of making and preserving truths.
We've posted in the past on Bitcoins - the online, digital currency built on top of blockchain - and our advice to small businesses remains the same. Unless you have a customer base interested in using them(nerds, criminals,etc.) you can ignore them for now. Too few are using them.
It's also too early to worry about blockchain.
But over the next couple of years you'll start to hear more and more about this technology. It's simply too compelling not to be used. Which is why you should know about it.
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