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Bitcoin might not be ready for business but blockchain is

By John Oates

The crypto currency Bitcoin recently hit a new peak value of $2,000 per coin. Since 2009 the price has fluctuated wildly thanks to positive and negative media coverage and dabbling by speculators.

The currency is still dealing with its public association with criminals – the cyber crooks behind WannaCry ransomware demanded payment in Bitcoins.

While the currency itself still has lots of issues – there’s no sign of values steadying and it is still difficult to turn Bitcoins into easily exchangeable currencies the technology behind it is attracting interest from both business and government.

In simple terms Bitcoin is based on blockchain technology which is a distributed database or ledger. Instead of storing data on one central server the information is distributed among thousands of different computers. Bitcoin has no central bank which keeps a record of who owns which coins, that data is spread across the network.

Whenever the ledger is changed or updated it is checked against all the other copies.

It exploits the network to guarantee accuracy – if you want to change the ledger you have to change it on thousands of different computers. Although Bitcoin might suggest anonymity the blockchain ensures that every single transaction is stored for ever.

Any industry which requires these sort of checks – whether finance or broader IT security – might start using some form of blockchain infrastructure in place of traditional server-client platforms.

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JPMorgan recently announced a partnership with ZECC to improve the bank’s Quorum platform which provides private, smart contracts for financial transactions based on blockchain ledgers.

Access and identity systems for corporate networks might shift to blockchain.

Media rights is another industry which is looking at how blockchain might make ensuring the correct royalties are paid far cheaper and easier than the current centralised systems.

There will be regulatory issues along the way but governments are also experimenting with the technology.

In the developing world it can provide a way to create or update a land registry for far less cost, and less potential for corruption, than a centralised system.

Georgia is using such a system to create time-stamped land records which it hopes will both reduce fraud and cut costs in maintaining an accurate land registry.

In the UK government departments can experiment with ‘blockchain-as-a-service’ which is available from the central Digital Marketplace.

The first use has been a trial by the Department of Work and Pensions to use blockchain to check and approve benefit payments using a mobile application.

Singapore has run a successful trial for interbank payments. Transactions were faster and record keeping costs were reduced. The next pilot is for bond trading and for international payments.

Apart from disrupting existing business models blockchain also offers some new ways for enterprise technology to manage its own systems.

The inherent difficult in hacking the system could radically improve enterprise security by easing checks on identity and network permissions.

It might also provide a way to make internet of things networks secure and safe for wide enterprise use.

The technology is still in the early stages of deployment and regulatory bodies like the International Telecoms Union are still grappling with certifying systems.

But the potential to radically reduce technology costs, free up logistics systems and create cheap, smart contracts means the basics of blockchain infrastructure will play a growing role in all enterprise systems.

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