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Blockchain: The revolution that hasn't quite happened

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  • Blockchain: The revolution that hasn't quite happened

    Imagine you are out shopping and get to the till but your card doesn't work. It turns out that your bank has had a computer meltdown and none of its customers, including you, can pay for anything.

    But what if the till had access to a record, or ledger, of the balance on your credit and debit cards that was updated anytime you bought something?

    Even with the bank's systems down your card would still work at the supermarket, because the till itself would know your balance.

    That is just one possibility offered by a distributed ledger, also referred to as a blockchain. The technology has been around for more than a decade and has been heavily hyped.

    It sounds pretty handy, but in practice, it is hardly used. So what happened?

    Blockchain has struggled to find a purpose, beyond powering cryptocurrencies like Bitcoin.

    In that scenario, the blockchain acts as a universal record of every Bitcoin transaction ever made. The blockchain is a ledger, or log, of those transactions and users on the network collaborate to verify new transactions when they occur. They're rewarded financially for this effort - an enterprise known as "Bitcoin mining".

    But the basic idea, of a ledger of information distributed around lots of different users instead of held centrally, has provoked a lot of interest.

    Proponents have long argued it could be a better alternative to traditional databases.

    But how transformative would blockchain-style alternatives really be? The shop tills example was suggested by Dave Birch, an author and advisor on digital financial services, who has been critical of some proposed blockchain schemes in the past.

    "I'm prepared to buy that," he says, of the tills idea. "I think there's some value to it."

    There are other ideas out there. Prof Gilbert Fridgen, a financial services expert at Luxembourg University suggests a distributed ledger system that keeps track of certificates and degrees issued by universities.

    No one organisation would be responsible for it. Rather, copies of the ledger would be held by multiple parties and individuals would be able to check that records of their own qualifications were accurate.

    It would certainly by useful. In 2018, a BBC investigation showed that there were thousands of fake degrees in circulation, so a decentralised system that tracks qualifications might appeal to employers.

    That said, Prof Fridgen notes that nothing about a blockchain itself can stop some corrupt individuals trying to add fraudulent information to it. Additional checks are needed.

    If those trust issues can be solved, then blockchains could have real benefits.

    News surfaced recently of members of the Windrush generation of migrants from the Commonwealth who have had their legal status questioned because records were not kept of their being granted leave to remain in the 1970s. In the future, such errors might be avoided by keeping information like this on a distributed ledger instead of relying on the government to look after it.

    Some big businesses have been incorporating the technology into their operations.

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