Everything Your Business Needs to Know About Blockchain

Interview with Wallet.Services | Blockchain Technology
In 2018 blockchain technologies will continue to emerge and mature in terms of scalability, verifiability, manageability and audit-ability. If you’re a business new to the world of blockchain, knowing where to start and how it fits into your operations can be confusing. Understanding blockchain platforms, emerging business models and processes will be critical to success.

In order to help you navigate the rapidly growing and highly lucrative world of blockchain tech, Waracle’s Marketing Manager Caroline, decided to interview Iona Murray at Wallet.Services to bring you everything your business needs 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 (DLT). 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: Because public networks, like bitcoin, aren’t owned by an entity, they must be governed by network consensus. Private networks are networks that, as the name suggests, are privately owned by an enterprise or individual. This lets the owner commission users on to the network and write the rules when it comes to how the network operates and data is processed.

Are we best to talk about blockchain in general, or bitcoin?
Blockchain. Bitcoin is only one application of DLT, and to focus on it is isn’t celebrating the true potential of blockchain tech. DLT 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! Moreover, there’s no doubt that both blockchain and AR technology will play a significant part in shaping the future of emerging technology.

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. If you’re interested to learn more, it’s worth downloading the mobile megatrends whitepaper.

How secure is blockchain?
Data contained on the DLT 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, Wallet.Services 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 DLT 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. We’ve heard a few technologists including Kumulos, say that they see mobile app developers to be looking at blockchain technologies is as an alternative to traditional mBaaS systems, especially to solve the unique challenges around HIPAA.

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. Some of the opportunities are outlined in this mobile megatrends whitepaper. Given Waracle’s work in the fintech sector, they are well placed to speak about financial services and technology. Why not contact Waracle to learn more about fintech?

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! If you would like to learn more about other trends affecting mobile app development, download one of our free whitepapers on mobile trends and mobile marketing.

Blockchain and Augmented/Virtual Reality
So now that you’re equipped with everything you need to know about blockchain itself, it’s worth taking some time to consider how the technology fits in with other emerging technologies, specifically augmented reality (AR). The chances are that in the next three to five years, all businesses will need to get to grips with how blockchain and AR will impact customer relations, business operations and how software is delivered. Whilst blockchain and AR are still relatively new technologies, both in their initial infancy, it’s estimated that in the next few years, commercial demand for these technologies and understanding how to leverage them to full effect will become a critical concern, especially within the enterprise. But how can distributed ledger technology, or blockchain, be combined with immersive and emerging technologies such as augmented and virtual reality?

There are currently a number of different companies trying to solve the answer to this question, each offering a highly innovative approach in terms of how DLT can be combined with emerging technologies to greatest effect. Most new innovations within this space are being developed on the Ethereum blockchain and one of the best examples to date is the Decentraland platform. Decentraland is a virtual world that operates based on open standards. It’s a virtual reality platform powered by the Ethereum blockchain whereby users can create, experience, and monetize content and apps. Right now, this project is arguably the most compelling VR platform on the Ethereum blockchain, with a market capitalisation of $76 million and around 18,000 holders. The platform enables users to wear a VR headset in order to explore and build a virtual world.

Decentraland enables users to buy land via the Ethereum blockchain. As the user purchases land, a record of each transaction is created and smart contracts are used to monitor each new modification. Once the user has purchased the land, they can perform a plethora of tasks such as constructing virtual businesses, houses. They can even listen to the latest music and hang out with their friends. Whilst the platform is new to market, enabling users to visualise blockchain technology via VR or AR, is a great way to educate businesses and consumers in terms of how to use DLT for maximum impact. One of the main barriers for DLT is the fact that it’s not a front-end technology (unlike VR/AR) and using an immersive heads up display experience is a fantastic way to visualise how blockchain works.

About Wallet.Services | Blockchain Technology
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.

If you’re new to the world of blockchain and DLT, understanding the basic elements of the technology and how it can be leveraged in a commercial setting will be critical for big businesses in the next decade. If you’re new to the world of augmented and virtual reality, the same logic applies. Understanding how emerging technologies such as AR and VR integrate with DLT is an entirely new concept altogether (for most businesses and consumers). If you’re a business interested in blockchain, augmented or virtual reality and how the two technologies can be combined for maximum impact, contact Mozenix today to kick-start the conversation. With offices across the UK in London, Glasgow, Edinburgh and Dundee, we’re ideally situated to elevate your AR plans to the next level. Alternatively, if you’re still unsure about where to start, it’s worth taking two minutes to complete our AR readiness test to help refine your thinking and project plan.