skip to Main Content

WTIA Cascadia Blockchain Council

Learn More

Blockchain (also called Distributed Ledger Technology) provides a time-stamped, universal ledger of immutable records for data that is managed by a cluster of computers rather than being owned by a single entity. Each of these blocks of data is secured and bound to each other using cryptographic principles (blocks chained together = block+chain). The cryptographic principles that secure and bind the blocks are what form the chain. Blockchain technology allows for a secure, auditable, and transparent chain of records. The long-term potential of the blockchain industry for Washington is vast, as it is expected to reach $3.1 trillion in business value by 2030 globally, with North America accounting for as much as a third of the market.

Definition Explained

Blockchain technology offers a way for untrusted parties to reach agreement (consensus) on a common digital history. A common digital history is important because digital assets and transactions are in theory easily faked and/or duplicated. Blockchain technology solves this problem without using a trusted intermediary1. To explain how this works, let’s look at two examples of a digital transaction between two parties – one using blockchain technology and one not.

Digital transaction not using blockchain:

Let’s assume that Person A has $10 in their bank account and they send $5 to Person B.  Both Person A and Person B have $5 now. However, what if Person B lies and says they never received the $5?

That’s where a trusted third-party comes in. It is up to the middleman (in this case likely a bank) to record the transaction and act as a trusted third-party. Person A can now go to the bank and prove, through their ledger and transaction history, that they did indeed pay Person B.  This system works well when we are able to trust the third-party, but we cannot always trust the third-party – fraud, embezzlement, and hacking are all real concerns that threaten to disrupt trust.

Enter blockchain technology:

With blockchain, we no longer need to rely on a trusted third-party but instead, we can use an entire network to validate transactions. This inherently builds in added layers of security and increased trust. Here’s how it works:

Based on an infographic from Word Economic Forum2

So, what happens if Person B says they didn’t receive $5 from Person A this time? Person A has proof of the transaction through a distributed ledger with multiple copies and validations of the transaction. They don’t need to trust a single third-party source because the entire network has records of the transaction.

In this example, blockchain is able to solve problems around:
  • Trust – Because the transaction was validated by multiple parties, there is no need for a single trusted third-party.  This removes the ability for that third-party to commit fraud.
  • Transparency – Multiple parties have visibility into the transaction, and so the entire process is more transparent and thus there is less ability for one of the parties to lie or commit fraud.
  • Accountability – Having a single agreed upon and distributed ledger that is validated by multiple independent sources creates an audit trail with increased security and trust.
Industries Impacted

While this example is focused on financial transactions, blockchain technology has the opportunity to disrupt many industries. Some examples include:

Banking

As a digitized, secure, and tamper-proof ledger, blockchain could enhance accuracy and information-sharing in the financial services industry.

Voting

Blockchain could serve as infrastructure for casting, tracking, and counting votes — potentially eliminating voter fraud and foul play.

Critical Infrastructure Security

The probability of hacking could be reduced since the cyber protections of blockchain are more robust than legacy systems.

Music and Entertainment

Blockchain could make it easier to share contact fairly using smart contracts

Real Estate

Blockchain applications can help record, track, and transfer deeds, titles, and more, while also ensuring that all documents are accurate and verifiable.

Healthcare

Blockchain technology would allow hospitals, providers, and others in the healthcare industry to share access to their networks without compromising data security and integrity.

Supply Chain Management

Blockchain can be utilized across a supply chain to document transactions in a permanent decentralized record, which would reduce time, costs, and human error.

Read more about industries that blockchain technology could disrupt in this CB Insights report.

With the potential to disrupt numerous industries, it is no wonder that Gartner predicts blockchain will create $176B in business value by 2025 and over $3T by 20303.

Image from fourquadrant4

Sources

  1. “What Is Blockchain Technology?” CB Insights Research, 11 Sept. 2018, www.cbinsights.com/research/what-is-blockchain-technology/.
  2. Wild, Jane, et al. “Technology: Banks Seek the Key to Blockchain.” Financial Times, Financial Times, 1 Nov. 2015, www.ft.com/content/eb1f8256-7b4b-11e5-a1fe-567b37f80b64.
  3. “Gartner Says Global IT Spending to Reach $3.7 Trillion in 2018.” Gartner, www.gartner.com/en/newsroom/press-releases/2017-10-03-gartner-says-global-it-spending-to-reach-3-trillion-in-2018.
  4. “Gartner IT Spending Forecast – Four Quadrant Go to Market Strategies.” Marketing Strategies That Drive Go-to-Market Plans – Four Quadrant, 14 May 2018, www.fourquadrant.com/gartner-it-spending-forecast/.
Underwriters
Back To Top
Skip to content