As an emerging technology – blockchain is often spoken about, but up until recently in the hypothetical. In recent years the technology has grown exponentially, and many organisations are not only exploring the benefits – but actively implementing it across a range of use cases.
Whether it’s for financial services or healthcare, global spending on this technology is predicted to grow from US&5.3 billion in 2021, to US$34 billion in 2026.
But what exactly is the technology? Read on to find out.
What exactly is blockchain technology?
Blockchain is a decentralised database or ‘ledger’ that provides a record of transactions to all participants within a network of computers. Blockchains consist of multiple blocks – each containing transaction data which is then encrypted to produce a hash. This hash is then added to the next block, establishing a chain. Et voilà – a blockchain.
Blockchains provide a transparent record of data sharing that is permanent, irreversible, and tamper-proof. Given it cannot be altered, and with no single entity controlling it, blockchains represent an incredibly secure technology.
What are its applications?
While cryptocurrencies – like bitcoin – are arguably the top use cases of blockchains, they are deployed across other financial services, and are used in the transfer or purchase of digital assets, like NFTs.
Blockchain technology also has a positive impact on digital identities, and here’s why…
It’s highly protected
Digital identities – or digital wallets – have the capacity to host endless datapoints on an individual’s identity and personal information– such as their D.O.B, address, and bank account details – alongside credentials like qualifications, employment status, travel tickets, driver’s license, and credit score – to name a few. With high profile consumer data breaches regularly hitting headlines, it’s vital that this information is highly protected.
If digital identities were to operate on blockchain technology, encryption technologies could guarantee this information is safeguarded with the highest levels of security, preventing access to anyone beyond the owner. With blockchain technologies operating on a decentralised network, and with no true ‘owner’ or source, its architecture is also distributed across different computers. This means bad actors cannot gain access at any one entry point, meaning the risk of a compromised network is unfeasible.
It allows data portability
With all datapoints and credentials conveniently consolidated into a single, universal digital wallet, the user experience could be enhanced exponentially. Users could say goodbye to the frustration of retrieving, printing, scanning and storing physical paperwork or digital assets to prove their identity or eligibility when signing up to services, making transactions far more streamlined and efficient.
This universal wallet could also allow data to be seamlessly transferred to different service providers and platforms, irrespective of the different authentication protocols and requirements at play. This single source of truth – i.e. the blockchain-supported digital wallet – would provide unprecedented interoperability and data portability.
It helps facilitate self-sovereign identities
With blockchain technologies, users could be in the driver’s seat with what data they do and don’t share. Consumers historically have had to overshare personal data. For example, when proving they were over 18 by sharing their driver’s licence, they also unnecessarily made the service provider privy to details like their address, name, and full D.O.B.
With blockchain digital IDs, consumers would instead be able to better manage their digital identity by selectively sharing only the elements of their identity that are required for the interaction at hand, thereby enhancing overall privacy.
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