Although digital transactions have increased significantly in few years, Blockchain remains an unsolved technology for the majority of business people. In short, it will change soon.
What is Blockchain?
In theory, Blockchain is simply a decentralised database of transactions that occur in a peer-to-peer network. Anyone who joins in the Blockchain can transfer value without the need for a central third-party. The blockchain is a distributed database, completely aligned to the structures of the Internet, which maintains a continuously growing list of encrypted data records, which are secure from altering.
The buyer and seller in the Blockchain are pseudonymous meaning they are given false or fictitious names. There is no need for the personal identity or the geographical location of their counterparty. Moreover, both can interact directly, without the need for third-party verification. The Blockchain automatically produces a transaction record without sharing any personal information. Instead, personal identities information is encrypted.
Imagine you are a ‘buyer’ via a Blockchain, and you don’t know the seller, but you do know that the seller has been trusted to enter the Blockchain. This indeed simplifies the entire process.
Blockchain and Bitcoin
Blockchain technology underlies Bitcoin and other so-called cryptocurrencies. As yet, those virtual currencies have not broken through the barriers of unfamiliarity and uncertainty, and they have yet to become widely accepted as payment options. Currently, price volatility and the chance of quick profits led Bitcoin being more of a tradable asset rather than a payment method.
Hence, Bitcoin is no more than the byproduct of Blockchain. It is indeed unique technology where Bitcoin is dependent on Blockchain, but the Blockchain technology is independent of Bitcoin.
David Treat, Blockchain lead and managing director at Accenture, says: “Now is the time for blockchain solutions to come to the forefront because the realisation has been made that this old technology that was born out of the 1920s and 1930s cryptography has tremendous applications in our current business environment.”
Almost any type of information can be digitised, codified and placed onto a Blockchain, creating a database the validity of which is confirmed by a community of computer users without a centralised authority.
Although some experts express scepticism, the power of blockchain is enormous. The Institute of International Finance says that: “Bitcoin miners [the computers producing and trading Bitcoins] now have 13,000 times more combined calculating capacity than the world’s 500 most powerful supercomputers, and it is estimated that the combined electrical consumption of these computers is enough to power the entire country of Ireland.”
The recent projections are showing that Blockchain will be in use by 65 percent of the enterprise by 2020.
Blockchain in the UAE and bringing clarity in diamond trading
The United Arab Emirates has become a global centre for the implementation of Blockchain technology. For example, Dubai has linked up with IBM to launch a scheme using Blockchain computing technology to process transactions and keep track of goods being shipped. The initiative will provide real-time data about the state of goods and the status of their shipment to Dubai’s customs and trade agencies and companies involved in the trade process. At the moment, IBM is working with DU (telecommunication company), Emirates NBD (largest bank of the UAE), Spanish lender Banco Santander, and Aramex (logistic firm).
Recently published report by DMCC states that Blockchain will bring new clarity to the diamond trade. On one side, Kimberley Process (KP), the initiative to stem the flow of conflict diamonds, supported by the UN will facilitate the certification process. On another side, since it is still difficult to trace the diamonds and there can be anonymity in transactions, Blockchain can be a perfect trusted transaction method.
In 2016 the United Arab Emirates had the honour of leading the KP and nominated DMCC executive chairman Ahmed Bin Sulayem to chair the global initiative. The Global Blockchain Council was set up by the Dubai Future Foundation to explore the application of Blockchain technology to operations including the international diamond trade. James Bernard, Director of Business Development, DMCC states: “Using Blockchain means we can centralise and secure the collection of all data. Today, diamond production and trade data is mostly manually transferred to a central website Blockchain technology can be used to automate this process and to share a ledger across the member network. The network will be private to the parties concerned, so only authorised parties are allowed to join, and secured using cryptographic technology to ensure that participants see only what they are allowed to see”.
Indeed, the authorised users can add the data on diamonds. Hence, all users can access the information in the network. The process will ensure trust and transparency for all users.