Overview
It's a complicated term so here are a few different descriptions:
Decentralized database of money.
Originally the formal name of the tracking database underlying the digital currency bitcoin, the term is now used broadly to refer to any distributed electronic ledger that uses software algorithms to record transactions with reliability and anonymity. This technology is also sometimes referred to as distributed ledgers (its more generic name), cryptocurrencies (the electronic currencies that first engendered it), bitcoin (the most prominent of those cryptocurrencies), and decentralized verification (the key differentiating attribute of this type of system). (Strategy+Business)
Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.
A blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues. (PwC)
From a business perspective, it’s helpful to think of blockchain technology as a type of next-generation business process improvement software. (PwC)
A simple analogy for understanding blockchain technology is a Google Doc. When we create a document and share it with a group of people, the document is distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the document at the same time. No one is locked out awaiting changes from another party, while all modifications to the doc are being recorded in real-time, making changes completely transparent. (BuiltIn)
Sources
Applications
Blockchain has a nearly endless amount of applications across almost every industry. The ledger technology can be applied to track fraud in finance, securely share patient medical records between healthcare professionals and even acts as a better way to track intellectual property in business and music rights for artists. (BuiltIn)
Although blockchain offers enormous potential, it is not a silver bullet. Instead, it should be considered as part of a wider digitization strategy. As a first step, consider the following six questions. If you answer yes to at least four, blockchain can create value for your organization (Strategy+Business):
Do multiple parties share and view common data?
Do multiple parties update and record data?
Is verification of records needed?
Do intermediaries add costs and complexities?
Are interactions time sensitive?
Do transactions depend on two or more parties?
Nodes
One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning. Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. Since blockchains are transparent, every action in the ledger can be easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their transactions. (BuiltIn)
Wallets (MIT)
Hot Wallet | Cold Wallet | Smart Contract |
Internet-connected applications for storing the private cryptographic keys that anyone who owns cryptocurrency requires in order to spend it. | Hardware wallets—storage devices disconnected from the internet. | Perhaps the most complicated touchpoints between blockchains and the real world are “smart contracts,” which are computer programs stored in certain kinds of blockchain that can automate transactions. |
Process
In a 2020 study, PwC’s economists ranked the top five uses of blockchain by their economic potential, predicting that using blockchain to prove provenance could generate US$962 billion for global GDP over the next decade. Notably, this was more than double the potential of any other use case. (Strategy+Business)
Time for Trust Movement?
PwC’s 'Time for trust' report explores the value blockchain can add to the economy by 2030. We look at how practical, everyday uses are creating an opportunity for organisations to deliver value by building trust and improving efficiency across industries, from healthcare, government and public services, to manufacturing, finance, logistics and retail. #TimeForTrust (PwC)