Blockchain technology, best known among experts for its key role at the heart of Bitcoin electronic-money transactions, allows for secure, transparent, decentralized operations. Everyone using the system can see what’s going on, yet the technology makes it difficult to hack into or destroy accounts. The strong security for transactions, which are made anonymously, is a main reason the technology’s potential goes well beyond digital payments. It soon could be used, for example, to secure medical records and voting in elections.
But those working on blockchain are a relatively small group. This is why last month IEEE formed a special interest group on blockchain technology. The idea is to create continuing-education courses to train people who want to work on the technology and develop standards for it.
“Blockchain’s potential is nearly unlimited; it is truly a disruptive force,” says Alpesh Shah, senior director of global business strategy and intelligence at the IEEE Standards Association, in Piscataway, N.J. “Many industries are ripe for disruption by blockchain technology.”
For the past seven years, the technology has been used primarily to track digital payments via Bitcoin. Because it is difficult to tamper with, it can be used to store digital information securely on the Internet.
One piece of a blockchain is the database that records transactions; the other piece is the network of “miners”—users of the database who are continually adding blocks. The system is designed so that each transaction is blocked by the transactions that come after it, so it’s impracticable—almost impossible—to go back to a previous transaction and make a change that would, for example, allow someone to falsely dispute a payment.
Peter Kirby, the president of Factom, a service that helps developers build applications with blockchain technology, explained the security feature in an IEEE Spectrum article about the technology. “You’re building a giant wall,” he says. And every time someone makes a new transaction, “you put a thousand bricks on top of it.… And that makes it very, very, very difficult for someone to change a brick way down at the bottom of the wall.”
Because of its architecture, blockchain is as secure, if not more so, than traditional banking systems where customers trust a few gatekeepers, like the banks. Blockchains, instead, rely on a universal network of complete strangers contributing to a public ledger. The technology then goes further and secures each transaction and verifies each user with public/private key cryptography. Transactions are tracked in the ledger—the blockchain. Each block of an encrypted ledger transaction is linked to the next one.
A hacker, therefore, would have to simultaneously compromise all the accounts that follow the one he wants to get into. This would require more computing power than all the miners combined would have.
Blockchain technology has not been widely adopted, however, in part because it is difficult to use. Accordingly, third-party services have emerged to help people make Bitcoin transactions without them having to actually use the blockchain.
Jonathan Mohan, founder of the BitcoinNYC Meetup group and a participant in the IEEE special interest group, predicts that banks, health care providers, and others will implement blockchain systems that are simple enough for anyone to access.
Health care is a natural fit for the technology, Mohan says, because medical records must be secure and accessible.
In a blockchain medical records system, people would not be able to alter previous entries. They couldn’t, for example, change a diagnosis made years before to hide, say, malpractice, or delete an entry altogether. The records would be easy to access by patients and health care providers. Moreover, because blockchain is a public database that hides the identities of users, medical records could be accessed by researchers to study diseases and other health conditions without concern about interfering with privacy.
Blockchain’s anonymity feature is also attractive for its application as a platform for electronic voting. And because the system can tally votes instantly, it’s possible to see in real time how many votes have been cast for each candidate before the polls even close. The Denmark Liberal Alliance Party was the first to use the technology for e-voting, during a party election in 2014. Ukraine plans to give it a try this year.
The need for educating blockchain programmers is crucial, Shah says. There are currently about 500 developers, but he predicts some 100,000 professionals will be needed, and soon. These new people will need training and credentials.
“What does it mean when I’m hiring blockchain developers? What are their credentials?” Shah asks. “How will I know they know how to build a successful blockchain application?”
ADHERING TO STANDARDS
As the technology continues to garner interest, there will be systems claiming they’re blockchains when in fact they’re not, Mohan points out. That’s why standards will be needed, which the IEEE special interest group on blockchain technology also plans to work on. The goal is to ensure that when different companies develop blockchain systems for the same purpose the systems will be compatible.
Banks could save a lot of money by adopting blockchain systems, says IEEE Senior Member Greg Adamson, chair of the special interest group. Adamson, a cybersecurity specialist for a bank in Australia, says the technology could automate much of the banks’ manual work.
But before any benefits can be realized, he points out, standards are a must. “Communication among hundreds of banks using blockchain will not be easy if there are two or more globally competing standards,” he says. As in so many situations, he says, standards will save companies a lot of headaches and security concerns.