Blockchain 101 June 27 2018 What is blockchain? You may have heard it in a company meeting or in the news, but you aren’t 100% sure how it relates to your organization. Whether its orders, payments, or account tracking, business transactions are taking place every second of every day. Each organization involved in a particular transaction has their own separate ledger, meaning their version of the transaction may be different than what actually took place or another organization’s record. Example 1: The transaction is recorded correctly at each company but using different units. Company ABC purchases 500 bags of cement from Company XYZ Company ABC’s ledger is represented as “Purchase: 500 bags of cement” Company XYZ’s ledger is represented as “Sold: 50 cases of cement bags.” Example 2: The transaction is recorded incorrectly at Company XYZ. Company ABC purchases 500 bags of cement from Company XYZ Company ABC’s ledger is represented as “Purchase: 500 bags of cement” Company XYZ’s ledger is represented as “Sold: 5,000 bags of cement.” Having multiple ledgers could, therefore, lead to a problem such as error, incompatibility, inefficiency, or even fraud. This is where blockchain steps in. In short, blockchain is essentially a shared ledger that allows all parties to see the details of a transaction from beginning to end, reducing the risk of issues. As each transaction occurs, the information is put into a block, and each block is connected to the one before and after it. These transactions then become blocked together, creating an irreversible chain called the “blockchain”. In regard, to our example above. A block would have been created for the transaction between Company ABC and Company XYZ. Since the transaction is placed into the system once, not twice both organizations are acting on the same information and can make decisions accordingly. In a more complicated chain, multiple transactions would be linked together to create a full chain. We’ve talked about a few of the concerns that blockchain addresses above, but what are some of the key benefits? First, the blockchain is distributed, meaning it is a shared system between all parties on the business network. This means no more reconciling disparate ledgers. Secondly, each organization in the ledger has specific access rights, ensuring information is shared on a need-to-know basis. Finally, the blockchain requires consensus from all network members and all transactions are permanently recorded. No one can delete a transaction. These benefits and many others allow transactions in the modern world to be performed quickly and securely, with no possibility of an error occurring. How is the technology used today? In healthcare, better data sharing between providers has resulted in a higher probability of accurate diagnoses, more effective treatments and an overall increased ability for providers to deliver cost-effective care while maintaining confidentiality Supply chain management has probably benefited the most from blockchain. Blockchain technology gives these organizations greater insight into where goods are being passed through, from beginning to end, i.e. from the manufacturer to the store. In the world of banking and finance, blockchain is being used to facilitate instant mobile payments. Greatly reducing the lag time between financial institutions. Blockchain technology has the capabilities to transform the modern world, bringing greater transparency between suppliers and end users.