Expert Insight: Blockchain Technology

This briefing on the history of blockchain and distributed ledger technology was commissioned by Business Expert Press as part of their now discontinued Expert Insights series. You can view and download the full article here: BEP Expert Insight Blockchain Nov 2017


Abstract:
Blockchain is a distributed ledger technology, which has its roots in the development of the Bitcoin cryptocurrency in 2009. The emergence of Ethereum, permissioned blockchains, distributed applications, and smart contracts has sparked rapid development. Blockchains are appropriate for any transaction or process that features a string of clear transactions and would benefit from distributed responsibility and disintermediated operation rather than centralized control. However, there are challenges and regulatory concerns to be addressed.

Keywords: Bitcoin, Blockchain, Cryptocurrency, Disintermediation, Decentralization, Distributed Ledger Technology (DLT), Ethereum, public blockchain, permissioned blockchain, Smart contracts

Introduction

Blockchain technology has been hailed as the most important development since the internet itself. Originally underpinning cryptocurrencies, starting with Bitcoin, the concept of Distributed Ledger Technology (DLT) is well established in the world of finance (fintech). However, blockchain has the potential to transform business practices and to address societal challenges, revolutionizing services in government and the private sector (UK Government Chief Scientific Adviser, 2016). This article examines the different types of distributed ledgers and their existing and potential applications in, among other things, digital identity, government, Internet of Things, accounting and finance, supply chains, and data security.

Development of Blockchain Technology and Bitcoin

Blockchain was originally introduced as the technology that underpins Bitcoin, the first working cryptocurrency. The idea of cryptocurrency has been in fictional and academic circulation for decades. In fiction, it is an appealing concept in the operation of futuristic societies. How else would any character described by authors from Douglas Adams to Isaac Asimov pay for rented ground cars or cocktails on arrival at the spaceport of a new planet? In research, the concept and workings of digital cash were suggested by a leading cryptographer in the early 1980s, with multiple articles exploring the mathematical underpinning of virtual currency (Chaum, Fiat, & Naor, 1988). Two fundamental problems were clearly defined at the outset. First, double spending: there is a need to prevent someone spending the same digital money more than once. Second, a cryptocurrency must be created, supported, and secured without recourse to physical reserves or central banks. A decade after Chaum et al., a computer engineer (Wei Dai, 1998) suggested solutions for the transfer and the creation of digital money, and also a process for the effecting of contracts, all of which have now been realized.
In 2009, an article was published under the pseudonym Satoshi Nakamoto proposing a “peer-to-peer version of electronic cash” (Nakamoto, 2009). Nakamoto’s proof of concept solved the challenge of double spending, and incentivized a huge network of users to create cash and maintain the system in perpetuity through the mining process. A working cryptocurrency, Bitcoin, was born.

Continue reading: BEP Expert Insight Blockchain Nov 2017

Kate Baucherel