Global Perspective: Blockchain technology is finding multiple applications that could revolutionise global trade and provide opportunities for the developing world
07 Sep 2018
Blockchain – the distributed ledger technology that underlies cryptocurrencies such as Bitcoin – appears set to transform a wide variety of industries and perhaps fundamentally change the way of business is conducted across the global economy.
While the technology is still taking off, and not everyone is convinced about its potential, many emerging markets are hoping that it will allow them to leapfrog older infrastructure and tackle a wide range of challenges. These include the costs and risks involved in developing centralised databases, issues of corruption and fraud in supply chains and land registries, and persistently high transaction costs for electronic payments.
A blockchain is a cryptographically protected, distributed and decentralised ledger of transactions. Rather than existing on a single computer, or a handful of computers or servers, the ledger is replicated across numerous locations, all of which are interlinked so that a change by one user – validated by his or her public key or password – is replicated across the entire ledger. No individual user controls the blockchain, but each can make changes to it to the extent that their own key allows; for example, spending the units of cryptocurrency that they own.
Such changes are permanent and cannot be reversed unless a majority of users agree to a so-called “fork” of the blockchain, which essentially restores it to the version before the change in question was made.
The name of the technology derives from its structure, the ledger is made up of a series of files called “blocks” that each record a number of transactions within the network, with each new block invalidating the previous one. For example, a Bitcoin block contains around 500 transactions. The technology rests upon a number of foundational elements, including the decades-old mathematical concepts of a Merkle tree and elliptical cryptography. However, the arrival of blockchain essentially dates from the publication of a paper under the name Satoshi Nakamoto in 2008, which allowed for the creation of Bitcoin, with the cryptocurrency being made publicly available the following year.