Blockchain – why it is valuable for you?

Many people discussing blockchain see it just as a support for cryptocurrencies, believing they are mostly the same thing. Needless to say that with the recent setbacks of most cryptocurrencies blockchain technology may look less relevant to businesses. But in all honesty, for no rational reason! In this interview we will explore with Yary Ribero (Blockchain Tech Lead at Ignite) why blockchain is much more than a ground cryptocurrencies are based on.

Katre: Can you explain in simple words what blockchain is?

Yary: Blockchain is essentially a sequential record of facts that have happened, an electronic ledger with advanced properties. Facts are recorded in transactions and transactions are stacked together in blocks through a mechanism known as mining.

Katre: And what is it that makes blockchain so valuable?

Yary: Anything recorded in such a ledger is signed electronically by the author allowing anybody to prove authorship of any statement but also to demand responsibility for it. This mechanism, well known long before we started imagining blocks, is embedded in the blockchain.

Katre: Could you elaborate? Maybe illustrate with an example.

Yary: Sure! As an example, let’s imagine that somebody wants to be able to prove that the brilliant work they have completed, a scientific research to be specific, is theirs. This scientist can already compile a document, calculate a digest and sign it digitally – all of this without a blockchain. What adds value in this process is that blockchain allows to publish such proof so that several important properties are added to it:

  • Proof of authorship: anybody can verify beyond doubt who the author of the published content is.
  • Publicity: the proof is public.
  • High availability: given the distributed nature of the blockchain network, it is very hard (or nearly impossible) to take it down. The proof is virtually available to anybody at all times.
  • Privacy: the information itself is usually not enough for an uninformed observer to guess what it is about. There are techniques to make it so that even though some digest is public, the nature of the content it is related to, remains a mystery for anybody beside those for whom the information was made public for.

Katre: Why do many people see blockchain just as a support for cryptocurrencies?

Yary: The first successful implementation of a blockchain was in the Bitcoin network which allowed to save only a very limited amount of information in the blockchain – it was basically only a ledger for value transfers. But the potential of a blockchain as source of trust was at that time already highly valued but just not fully exploited. This helps to see the difference between a cryptocurrency and its underlying blockchain.

Katre: And how do you respond to those who see blockchains worth in being a mean for exchanging value?

Yary: Well, initially blockchain was used as a mean for exchanging value, as a digital currency. Very soon though it became clear how, beside a protocol, its implementation offered a data structure with some very interesting properties:

  • Safety: the data in blockchain is safe. Replication makes it impossible to delete.
  • Immutability: the data cannot be tampered with. This would require taking control of the whole blockchain and rewriting it completely.
  • Auditing: it is possible to follow the chain of blocks and track down how the information exchanged has changed and whose hands it has gone through.

Katre: Beside the previously mentioned benefits does blockchain offer any additional value?

Yary: If we think of a blockchain as a database (even though the data access would be slow)  we wouldn’t need to worry anymore about such fundamental problems as a disaster recovery. For a blockchain the required features that are usually expensive would come for free, not to mention the high availability (virtually 100%) and robustness of the network. Blockchain is the perfect data source for applications with a low data exchange load of vital information. Given such preconditions, blockchain also becomes a great candidate as a source of trust.

Katre: Could you please elaborate?

Yary: Let’s explore more the potential unleashed by using digital signature in such a context. It is relevant to keep in mind that a document digitally signed is legally binding, therefore also relevant in case of legal disputes. More digital legal tools can be built on top of it:

  • Identity verification: it is possible to prove one’s own identity using blockchain. Such cases have already happened and there are already several solutions available for it.
  • Private contract proofs: a digest of a private contract can be saved into the blockchain, making a digital notary of it. Such solutions already exist and some are in the course of development.
  • Proof and transfer of property: in the same way, property can be recorded on the blockchain and transferred.

Katre: What is in store for the future for blockchain?

Yary: Contracts are one of the main targets of the second generation of blockchains such as Ethereum. It provides specific data structures and even programming languages for writing and enforcing contracts within the blockchain itself. Such revolution bears the name “Smart Contracts” and is already a reality.

The advantages of using blockchain are obvious. It is an automatic, impartial, consistent, robust arbitration system that will simplify and reduce the costs on bureaucracy both in official (law compliance) and internal matters – the bureaucracy all companies (especially large ones) have to deal with on daily bases to complete their tasks and implement important decisions. Thank you Yary Ribero for the input on explaining in detail the value of blockchain.