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Blockchain Brings Speed, Security and Transparency to Business

Blockchain IBM
Illustration by David Plunkert
 

Technology has helped streamline many business processes, however some—such as supply chain elements—continue to take weeks to complete. That’s about to change.

The rise of blockchain software is enabling companies to experiment with methods of sharing information securely and quickly, eliminating the need for paper records and hours spent tracking invoices and payments.

“Blockchain is software that provides an immutable electronic ledger that can be used for the recording of information and assets shared across multiple departments or other entities,” says Donna Dillenberger, IBM Fellow, z Systems*. It has the power to transform many business processes.

Blockchain was born as a result of the Great Recession in the U.S. Several independent programmers upset by the behavior of government and financial institutions looked for a way to create a currency that wasn’t tied to a monetary body. They developed the blockchain protocol and used it to create bitcoin—an independent currency that isn’t owned, managed or centralized by any entity.

Bitcoin uses immutable ledger software to record payments with wallet IDs on multiple copies of the bitcoin database. That way, if one server goes down, others still contain the copies, preserving the transactions.

Since its inception, blockchain has captured the interest of a number of industries, including finance, manufacturing and healthcare. “The IT community and the business community then realized that not only could you use blockchain to indelibly record bitcoin transactions across participants, but you could also use it to record transfer of conventional payments,” Dillenberger says. Any industry that interacts with partners, users, suppliers or regulators would benefit from using blockchain to share information, she adds.

Built-In Security

Blockchain immutability relies on keeping copies of the data on multiple databases and ensuring they’re always kept in sync. In addition, the data can’t be deleted or changed without the action being noticed, Dillenberger notes.

The software uses hashing—a function where data is put into the system and yields a deterministic, opaque value—to keep track of data changes. “Since hashing is deterministic, if you give a hashing function the same data, it will come up with the same hash value. If you change the data, a hashing function will come up with a different hashing value,” Dillenberger says. You can hash information with the hash of a prior record or the rest of the blockchain data.

If someone deletes or changes a record, the hash value will no longer match the recorded hash values in all of the other copies of the blockchain. In that case, the rest of the blockchain network recognizes that the records no longer match. The protocol doesn’t allow you to remain a part of the blockchain until your database is synced with the others, she notes.

Shirley S. Savage is a Maine-based freelance writer. Shirley can be reached at savage.shirley@comcast.net.



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