Blockchain technology will be critical to provide identification of fraudsters, equipment used for such practices, unsafe transactions, and other illegal issues that are addressed by AML (“Anti-Money Laundering”) and EFM (“Enterprise Fraud Management”) policies. We will see in Brazil the adoption of Blockchain’s technology to comply with these policies both by the private and public sectors in the coming years.
Blockchain technology is still known to most people almost exclusively by Bitcoin’s cryptomicon support. Bitcoin Blockchain manages around 200,000 transactions a day or USD 150 million globally, without the need for financial intermediaries. By making an analogy, we can say that Bitcoin is for Blockchain just as an application is for an iPhone or Android. In other words, blockchain is the technology that enables the existence and transactions with Bitcoins. The fact is that it can support a number of applications that go far beyond crypto-coins.
It is interesting to note how the development of a technology that was designed to support cryptomoedas has resulted in something that will far outweigh the benefits initially expected – including those related to the crypto-coins themselves. Blockchain is consolidating itself as one of the technologies that will generate enormous value in the next years for different sectors like health, entertainment, commerce, real estate, industry, government, among others.
In the context of Smart Cities, some applications that are being developed with blockchain technology include transparent storage of public archives, voting processes, intelligent contract management, distribution of public funds, and distributed and participatory decisions which involve greater population-government interaction. We can mention in this sense some examples such as the state of Delaware project for the archiving of public information and the proposal of the city hall of London for the implementation of Mayorchain aiming to increase the transparency of the city’s budget and crowdsourcing of ideas for reducing management costs. Still in the UK, the federal government is executing a pilot project so that pension payments to the population are made through a blockchain network with strong gains in speed compared to the current system.
Blockchain technology has the potential to make financial exchanges, business management, medical record keeping, polls, and other applications countless easier, more agile, secure and less costly. The economies with processes of control and validation that today require the maintenance of specific human resources will be significant as blockchain becomes more widespread.
One of the applications that receives more investments in the context of blockchain technology deals with smart contracts, which are basically programs that can automatically translate and execute the terms of a contract. When a pre-configured condition on a smart contract is met the terms of the agreement can be automatically executed transparently and supervised by blockchain network nodes. For example, a payment may be made by a contracted date or the authorization to ship a product.
The identities of the parties to an intelligent contract may be kept in complete secrecy if so agreed between them. The same applies to its content that may remain open to participants in a blockchain network, for example, for analysis and monitoring of the market for a particular product or service, objects of the contract.
To illustrate the diversity of applications of blockchain technology and the spectrum of benefits that can be extracted in this sense, mention should be made of the project being developed by the Amazon Bank of Codes (Earth Bank of Codes), Earth BioGenome Project and World Economic Forum, which aims to map the genomes of numerous species of plants and animals originating in the Amazon rainforest. This large Big Data genetic information stored distributed in a blockchain network will be accessible for commercial and scientific use, ensuring that all economic gains generated with components formed from its data are also reverted to the countries from which the biological assets are originating, among them Brazil.
The Nagoya Protocol of 2010 has been trying to address the issue of identifying the origin of these assets in order to benefit the countries from which they have been extracted, but it is a complex process for which there are a number of barriers, including policies. Blockchain technology may be the definitive solution to the question. An unalterable digital identity will be assigned to all biological data that will be monitored and stored by the network nodes. Whenever this data is used the new records, after being authenticated and validated, will become part of the distributed database. In this way the benefits can be reverted to the countries according to the origin of each asset.
In addition to benefiting countries of origin, the major benefit of this blockchain technology-based network is to allow knowledge to be extracted from the forest and not more specimens of the species themselves. In other words, the mapping of genetic sequences will allow for research and commercial use of forest elements without animals and plants needing to be extracted in loco. Elements from the forest may integrate diverse products while their sources of origin are preserved.
In the next post in this series we will focus on the disruptive potential of blockchain technology. Follow it.