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Blockchain: So Much More than Bitcoin

by | Mar 9, 2018 | Business News

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Blockchain-based credit-score app, Bloom, is experiencing a record-breaking number of enrollments.  All of this comes on the heels of the recent news that an additional 2.4 million people were affected by last year’s data breach at Equifax, bringing the total of customers impacted to 147.9 million.   Bloom is an Ethereum-based decentralized app (dapp) that promises a high level of security when it comes to personal data. It is driven by “blockchain technology” which enhances privacy through the anonymization of data.

HOW DOES BLOCKCHAIN KEEP US SAFE FROM HACKING?

Blockchain is a decentralized database that stores a registry of assets and transactions across a peer to peer network. Basically, it is a public registry of who owns the data and who transacts the data, it secures the information through cryptography, and eventually locks it into blocks.  The blocks are replicated on all computers in the network, which makes tampering very arduous. It is transparent, safe, auditable, and resistant to outages.

Blockchain is a new way of trading valuable properties, whether they be currency, energy, or personal information, in a decentralized environment without the need of a controlling entity, like Equifax. Any changes or movement of data requires a majority in the network to agree that the request is valid.  Therefore, hacking becomes very difficult in that one would have to break into at least 51% of all computers on the network, and not just one.

In an interview with Forbes, Bloom’s co-founder, Daniel Maren, said: “With Bloom, identity fraud is far less rampant since every credit check no longer requires the exposure of sensitive personal data.”  He added, “By disintermediating middlemen, who are no longer necessary to establish trust, the blockchain cuts out bloat and rent-seeking. By solving for trust without centralization, decentralized organizations can thrive on a scale never before possible.”

BLOCKCHAIN IS NOT BITCOIN

For clarity, most of blockchain’s recent public exposure has been its association with Bitcoin and other cryptocurrencies.  As a part of the hype to get investors interested, many misunderstand and think blockchain is Bitcoin.  While blockchain technology has the potential to radically change the way we trade and exchange assets and information, it is still in its infancy stage.  However, over the next five to 10 years, it may change how we conduct much of our business by shifting power away from centralized institutions like banks, credit reporting companies, and government agencies.

BLOCKCHAIN RECOGNIZED GLOBALLY IN DAVOS

When the world’s elite gathered in Davos, Switzerland for the annual meetings of the World Economic Forum, there was enormous noise around the “blockchain” movement, and, as Forbes reported, for a good reason:

“Blockchain removes the need for gatekeepers from other processes. The key takeaway is that the Blockchain could support not only cryptocurrencies but also other financial instruments like equity, securities and derivatives; smart contracts and smart property; new voting systems; identity and reputation systems; distributed databases; and even the management of assets and resources like energy and water.”

BLOCKCHAIN: A POSSIBLE DISRUPTER TO HEALTHCARE, ELECTION RESULTS, AND GUN LAWS

So, let’s think outside of the box and look at some of the areas where data chaos exists in our country and where blockchain might disrupt the current way of doing business.  First, my favorite is the healthcare sector, where numerous outdated legacy systems make protecting private data nearly impossible and leave providers in desperate need of secure platforms to store and share data. Gem and Tierion are joining forces with Philips to find ways to use blockchain in the healthcare sector.

Blockchain has the potential to improve the process of voter registration, verification, and electronic vote counting.  Creating viewable ledgers of recorded votes that are auditable and difficult to change will make elections more fair and democratic.  Imagine a world where voter turnout reaches 80% or higher because we no longer have to stand in long lines and cast our votes in person in an antiquated voting booth. Currently, FollowMyVote.com is creating blockchain technology to address these issues.

How about a secure, up-to-date registration database to legally track the purchase of firearms? The ability to cross-reference it with police and military databases also using blockchain technology could quickly help identify inappropriate behavior.

The list goes on, and includes many areas in which fraud and waste run rampant, such as pharmaceuticals, insurance, energy management, public benefits, supply chain management, and charitable giving, just to name a few.

It is essential to remember that blockchain is not a “get rich quick” platform, and we will not wake up tomorrow with everything blockchain.  Many aspects of this technology will need to be tested, and some will require being rolled out in a controlled environment.  Maybe the best way to think of blockchain is that It is more of a science, developing over time with the goal of incrementally improving broken systems and giving consumers control in a more secure environment.

Read More From Teresa J. Read, CPA

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