March 9, 2018 9:30 am
Since 2016, the term blockchain has been well covered in the media, mainly thanks to the hype following Bitcoin and Ethereum. These two cryptocurrencies have been run using blockchain technology. However, there are other domains where the blockchain finds its use. Some are noble and some surprisingly profane. Can you believe that this technology has proven useful to check meat quality from the moment an egg hatches, all the way to the product in the customer’s fridge? Or, getting back to big issues, that the blockchain can help empower the powerless, enabling them to participate on transactions that are structurally out of their reach within the traditional means? Sometimes, the blockchain technology is referred to as a ‘new internet’. The potential is undoubtedly huge.
Blockchain, originally block chain, is type of distributed ledger, comprised of unchangeable, digitally recorded data in packages called blocks. Each block is then ‘chained’ to the next block using a cryptographic signature. This allows blockchains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permission (private blockchain) or no permission (public blockchain). Distributed ledger is a record of information (database), that is shared across the network on multiple sites (computer ‘nodes’). Blockchain is just one type of distributed ledger, not all distributed ledgers necessarily employ blocks or chain transactions. Another type of a distributed ledger would be, for example, a consensus ledger. Blockchain technology then allows a number of participants in a restricted or unrestricted peer-to-peer network to validate new transactions or blocks of new transactions and append them to the chain of previously validated transactions or blocks of transactions. By sharing identical information across its network, the blockchain cannot be controlled from a single spot. What’s more, changing any information within the blockchain would require excessive computing power, which would have to override every single copy in the network.
The ‘magic’ of the blockchain technology lies in digitalisation of the processes that needed a material form and a centralized proof before. That would not only include the independent issuing of money, but also, for example, identity cards or land ownership changes. Since a blockchain operation can be authorized simply via telephone, for it does not require a smartphone or an access to Internet, it is an achievable way to secure elements of legal status for poor people in remote areas. Blockchain technology can also help to store and secure identity papers, medical records and the documentation of ownership of assets for refugees on the move. Therefore, it has been recognized as a tool for the empowerment of women in areas of the world where it is difficult to access the traditional means of (ex)change. New solutions, based on the blockchain technology, shall be piloted in humanitarian crisis settings.
Blockchain technologies are expected to impact digital services and transform business models in a wide range of areas, such as healthcare, insurance, finance, energy, logistics, intellectual property rights management or government services. Various private companies are engaged in pilot projects and many states have announced initiatives as they seek to reinforce their use of blockchain technology. The European Commission decided to build a cross-border platform on the existing initiatives. In February 2018, ‘The EU Blockchain Observatory and Forum‘ was launched by the Commission with the support of the European Parliament, represented by Jakob von Weizsäcker, who is responsible for the recent report on virtual currencies.
Nonetheless, not only excitement follows the blockchain technology. The European central bank representative has warned that a collapse in the virtual currency world can result in a collapse in the real world. The U.S. banks have already taken measures to forbid the use of credit cards to pay by cryptocurrencies, amongst other precautions. Moody’s report from Autumn 2017 mentions blockchain as a ‘distant threat’, and warns that the blockchain technology is untested in large volumes, where authorizations need to be processed in fractions of a second. In fact, time is what we pay in order to get an authorisation of a blockchain transaction from all the nodes that are a part of a wide public network.
Yet, it has been predicted by the financial and new technology media, that in 2018, the blockchain technology will go mainstream and really break through from the virtual world to the real one, often mentioning the Internet of Things (everyday electronic devices managed on distance).
You can find definitions and context of the above mentioned specific terms in our IATE database. For example, here are the entries for ‘blockchain technology’ in IATE:
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- European Commision. (2018) European Commission launches the EU Blockchain Observatory and Forum. Press release. Available here. [On-line. 01/02/2018. Accessed on 08/03/2018]
- Rosic, A. (2017) What is Blockchain Technology? A Step-by-Step Guide For Beginners. Available here. [On-line. 2017. Accessed on 08/03/2018]
- Gronholt-Pedersen, J. (2018) Maersk, IBM to launch blockchain-based platform for global trade. Available here. [On-line. 16/01/2018. Accessed on 08/03/2018]
- Hendrix Genetics. (2018) New blockchain project involving turkeys and animal welfare. Available here. [On-line. 24/01/2018. Accessed on 08/03/2018]
- Terenzi, C. (2018) JD.Com is Working With Blockchain Technology to Improve Food Safety. Available here. [On-line. 05/03/2018. Accessed on 08/03/2018]
- UN Women. UN Women and partners to pilot blockchain technology in humanitarian action. Available here. [On-line. 02/02/2018. Accessed on 08/03/2018]
- Elčić, S. (2018) Americké banky se obávají, že by je kryptoměny mohly vyřadit ze hry. Bitcoin a spol. označují za hrozbu. Hospodářské noviny. Available here. [On-line. 03/03/2018. Accessed on 08/03/2018]
- Akhtar, T.(2017) Moody’s: Threat of Blockchain and Cryptocurrencies Is Distant but Inevitable. The Bitcoin Magazine. Available here. [On-line. 24/10/2017. Accessed on 08/03/2018]
- Cole, N. (2018) Will Be The Year Blockchain Technology Goes Mainstream. Here’s Why. Hacker Noon. Available here. [On-line. 01/01/2018. Accessed on 08/03/2018]
Written by Veronika Lovritš – Communication Study Visitor at the Terminology Coordination Unit of the European Parliament (Luxembourg) and a student of the Master Program in Learning and Communication in Multilingual and Multicultural Contexts at the University of Luxembourg. She holds an MA in Law and Legal Science and a BA in Sociology from the Masaryk University in Brno, Czech Republic. She speaks Czech, English, German, French and Luxembourgish.
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Tags: banking, banks, blockchain, Commission, cryptocurrency, EU, finance, new technologies, UN