As speculation on the identity of the inventor of Bitcoin continues (see the article “The long search for Satoshi Nakamoto”: http://www.bbc.co.uk/news/technology-36168864), so too does the question of how we can widen the application of blockchain technology to other areas.
The key attributes of blockchain technology are frequently touted as:
- decentralisation: instead of using one central repository of records, a copy of all transactions made using the blockchain software is downloaded onto each participating computer;
- transparency: as each participating computer has a copy of the full digital record of transactions, each participant has the ability to access and verify these transactions; and
- anonymised authentication: once the software is downloaded, the participant can generate both a publicly shared address and a private key for that address, so that the participant’s identity is shielded as it signs off on a transaction made from that address.
It is this combination of attributes that makes the development of blockchain technology an exciting prospect. As blockchain was developed to create a digital currency, its natural fit is for use in the finance area, such as a payment scheme or a consumer loyalty points programme. However, the underlying attributes of blockchain suggest that its application can go further than the financial services industry to areas where transparency and anonymity are needed, such as in online voting systems. Similarly, its ability to decentralise a system that is traditionally run by a central operator makes it useful in areas like energy trading, where for example individuals participating in an energy microgrid want to buy or sell excess energy made from their neighbours’ home solar panels.
What are the downsides of blockchain? A key concern that is being looked at by both developers and users is size constraints. The blockchain capacity at Bitcoin is nearing its limit, and members within that community have taken different approaches as to how capacity can be increased; the debate is ongoing. Capacity and scalability issues will face anyone looking to adopt blockchain technology. Another issue is that blockchain is open source technology, and therefore the usual concerns around use of open source materials (the limitations placed on its use and incorporation into proprietary software, the reliability of the underlying code, etc.) still apply.
But as investment and research into blockchain technology continues, there is little doubt that this is an area to watch.