It’s time to stop watching bitcoin and start understanding blockchain.
True, the bitcoin rollercoaster is riveting: The cryptocurrency rocketed from $800 per bitcoin in January 2017 to an all-time high of $19,783 Dec. 17, only to plummet to $13,800 on Dec. 22, losing one-third of its value in 24 hours.
But blockchain, the technology bitcoin is built on, is what matters. Over the next few years, it’s set to become the foundation for everything from public records to medical data to insurance. In short, blockchain is the next big disruptor — and business leaders in every industry need to figure out what it means for them.
“We’re missing the point,” National Cybersecurity Center interim CEO Vance Brown said of the current obsession with bitcoin. “It’s not just about the money. Bitcoin was just the first application built on blockchain but the implications are far beyond that.
“Blockchain’s a revolution not just economically but in everything — in terms of the way government could work, our medical systems, every system out there. It’s transformative.”
Blockchain is different from every data system that has come before it, not least of all because it removes the need for an intermediary, central authority or “trusted third party” in transactions. Blockchain is a distributed database that stores records in blocks. Every block is linked (or chained) to the next, in chronological order, using a unique cryptographic signature. Those chains of transactions form a permanent ledger, openly distributed among multiple parties in a peer-to-peer network. Once information is stored in the blockchain, no one can revise it, alter it or tamper with it: Any attempted changes are very easily detected.
In blockchain, there’s no single point of power and no need for a central authority, because the system makes it almost impossible to interfere with the data. That immutability — the guarantee that information on the blockchain can be trusted — takes the usefulness of blockchain far beyond cryptocurrencies.
Like Brown, Christopher Gorog says we’ve yet to see the most powerful uses of blockchain.
Gorog, lead faculty in cybersecurity at Colorado Technical University, said the “tech stock feel” of bitcoin has drawn attention to blockchain over the past couple of months, as people grapple with the idea that they’ve missed an opportunity to make money.
“I think that’s been the driver — money is always the driver for everything,” he said. “But the biggest use cases for blockchain aren’t cryptocurrency. That’s my opinion.”
In government programs alone, Gorog said, “using blockchain technology can offer the ability to control functionality, track transaction, verify identity, resist tampering, enable logistics control for a large number of participants, protect privacy and support accountability in auditing.”
Blockchain is also the future of cybersecurity, although Gorog acknowledges “that’s the hard part to get your mind around.”
People are used to cybersecurity being associated with a negative motivation — stopping fraud, stopping theft, stopping cybercriminals. Blockchain flips that, he said, and sells positives — like trust, identity and tamper-resistance.
“We’re turning the whole thing on its head.”
How do you sell trust? Gorog says a notary is a good example.
“You pay $5 to prove your signature. How many places do we do that in society — where we need a third party to put a list of two people together and we have to identify that trusted third party?” he said. “This is what blockchain does in every instance.”
Blockchain, Brown said, is “a different way of living, it’s a different protocol for the internet and it’s a revolution in the way information is stored.
“It’s much more secure,” he added. “In today’s world your information is stored on what’s called a single node. Even data centers are a single place to go attack. … In the new system you’re talking about thousands and millions of computers [storing the same set of information] so you’d have to attack them all — and how do you do that? I don’t think you can.”
Along with cybersecurity, Brown pointed to investing, public records, medical data and digital media as potential use applications for blockchain.
On the investment front, 2017 saw the rise of initial coin offerings, or ICOs, which allow startups to bypass banks and traditional venture capital firms and raise money directly from investors.
With an ICO, a firm creates its own cryptocurrency on the blockchain and issues it to investors, who can trade it or use it to buy goods and services from the company when it launches. In December, The Wall Street Journal reported more than $4 billion was raised from ICOs in 2017.
Developers are also pushing ahead with a range of blockchain applications in health care. A prototype system called MedRec is one example. Developed by John Halamka, chief information officer at Beth Israel Deaconess Medical Center in Boston, along with MIT Media Lab researchers, MedRec uses a private blockchain to automatically keep track of who has permission to view and change the record of medications a patient is taking, according to MIT Technology Review.
Just last week, San Francisco-based startup Akiri announced it is launching a blockchain-based network-as-a-service platform for health care. Akiri Switch is a subscription-based private network that will transmit data securely between health care organizations through a standardized system of codes.
Europe is already ahead of the United States in deploying blockchain applications to manage public records: To protect property rights, the Republic of Georgia’s National Agency of Public Registry has moved its land registry on to the blockchain, registering titles on a private blockchain and making them visible on a public blockchain. And Estonia’s blockchain-based Healthcare Registry allows citizens to log into their medical records using digital identities — and also lets them see exactly which medical professionals have logged in to their records, and when.