FEATURE : BLOCKCHAIN
Blockchain and cryptocurrency
With the terms Blockchain , cryptocurrency and Bitcoin often frequently lumped together , along with digital currency what is the main difference with each term ?
Dr Neil Pennington , Senior Advisor , Strategy and Innovation , Idoneus , explained that Blockchain is the software-driven digital network that operates the distributed ledger and smart contract system . Dr Pennington said cryptocurrency on the other hand is one term ( digital assets and digital currency are others ) to describe the tokens that are used to transfer value and manage transactions and incentives in a Blockchain system . “ There are many cryptocurrencies that are ‘ native ’ to particular Blockchains . Bitcoin was the first cryptocurrency associated with the Bitcoin Blockchain system and is by far the largest in value by market cap ,” he said .
Ian Jansen Van Rensburg , SE Director , VMware , said by now , anybody who is familiar with the concept of cryptocurrencies would have encountered the term Blockchain . And yet , added Van Rensburg , many still mistake the likes of Bitcoin and Ethereum to be Blockchain or vice versa . “ Simply put , if Bitcoin was water , Blockchain is the plumbing that delivers it to you . And from a technical perspective , Blockchain is a decentralised database or ledger consisting of transactions across various network nodes ,” he said . “ This means that Blockchain has use cases far beyond cryptocurrencies . Today , it is actively being used in logistics , FinTech , insurance , government , pharmaceutical and numerous other industries .”
Van Rensburg said in some respects , Blockchain can be equated to a person ’ s life on earth . “ At birth , this can be called the ‘ genesis block ’. The genesis block contains the person ’ s weight , name , ID number , hair and eye colour , and so on ,” he said . “ Any changes to the person , including life events like ( school , graduation , work and marriage ) are added in subsequent blocks while maintaining the previous block information . Each of these blocks contains a unique hash in addition to the unique hash of the block before it . This means that when the information on a block is edited in any way , the block ’ s hash code is changed forever while the hash code on the block after it would not be . This makes Blockchain a very secure technology .”
Jason Wu , Director , SoBitX , said Blockchain is the way to organise the transaction data in a block and chained together in an append-only mode . Wu said normally the data in a Blockchain is stored in a decentralised network instead of the centralised data centre as in a traditional Internet data centre and it ’ s the essential component of many cryptocurrencies .
“ A cryptocurrency is a form of digital asset based on Blockchain technology that owns a network physically that is composed of a large number of computers ( nodes ),” he explained . “ The word ‘ cryptocurrency ’ is derived from the encryption techniques which are used to secure the network . Bitcoin is the first cryptocurrency based on Blockchain technology . It created a new era for digit assets . Without Blockchain , Bitcoin wouldn ’ t exist , however , Blockchain technology can be used for different operations such as maintaining a transparent record of assets , tracing the ownership of goods to their sources and provide proof of insurance .”
Blockchain challenges
Given the momentum around Blockchain technology , what are some of the common challenges that CIOs and IT teams deploying this technology face and how can they avoid this ?
Mosam noted that scalability is still a problem – and Blockchain technology depends on scalability for success . He explained that significant technological , political and regulatory gaps prevent widespread adoption and the ecosystem remains immature . “ To fully use Blockchain technology , businesses must transform their core operating models , systems and processes , which could make the traditional centralised business model irrelevant . Many businesses are not ready to take on this kind of risk ,” he said .
He said while Blockchain has been synonymous with cryptocurrencies , a large majority on the African continent are still unbanked . “ To date , cryptocurrencies have mostly offered opportunities to those who don ’ t have access to traditional financial services . Governments and institutions within Africa are also harnessing the Blockchain technology in different industries over products to provide more transparency and control to their citizens , customers and other institutions they might be dealing with ,” Mosam observed .
According to Mosam , examples within Africa where governments and private institutions have embarked on exploring and implementing Blockchain technology include De Beers , a South African-based diamond company which introduced Blockchain technology to authenticate diamonds across Africa . “ This pilot programme using Blockchain is to ensure its diamonds are authentic , conflict-free and natural . Blockchain provides a permanent , unchangeable record for every diamond registered from the moment it ’ s mined ,” he said . “ In the Democratic Republic of Congo , the country is piloting a scheme that uses Blockchain to monitor cobalt mining . The scheme aims to ensure that cobalt
Mohammed Mosam , Director , Product Marketing , Sage Africa , Middle East and Asia
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