(MENAFN - Khaleej Times) Blockchain's a buzzword right now. And why not: it has potential to transform the way we do business, which in turn will benefit society. What as once known as the backbone of cryptocurrencies - Bitcoin, initially - is now creeping its way into other sectors.
And Dubai, ever at the forefront of innovation, is putting a premium focus on the technology, with the Dubai Blockchain Strategy, launched by Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, glaring proof of the emirate's commitment to leveraging its potential.
And while we're not literally going A-to-Z, we'll do our best to explain - in the simplest possible terms - what this technology is.
What is blockchain?
The technical definition, according to Investopedia, is that it's a "digitised, decentralised, public ledger of all cryptocurrency transactions. Constantly growing as 'completed' blocks [the most recent transactions] are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central record-keeping. Each node [a computer connected to the network] gets a copy of the blockchain, which is downloaded automatically."
"Originally developed as the accounting method for the virtual currency Bitcoin, blockchains - which use what's known as distributed ledger technology - are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitise, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record's authenticity can be verified by the entire community using the blockchain instead of a single centralised authority."
In simplest terms, it's a growing collection of records (blocks) under one system that all participants have access to, and that no transaction can be made without the approval of everyone in it.
What's a block?
Familiar with accounting? Think of blocks as a page in a record book: once that page (block) is completed, then you turn to the next page. In the case of Bitcoin, blocks are created when a new Bitcoin is discovered or 'mined', and gives way to the next block in the chain.
And by the way, 'mining' is the term used for unearthing Bitcoins, done through a process of solving highly-complex mathematical puzzles.
Now, a block is eventually a permanent store of records which, once written, cannot be altered or removed. Now, if you really insist on changing data on a block, you'll have to tinker with every single one before it to succeed. Yes, trying to alter blockchains is technically possible, but, as website Bits on Blocks puts it, "it is extremely hard to change without collusion, and if you try, it's extremely easy to detect the attempt".
Let's put this in a more practical manner. Remember that there are 21 million Bitcoins up for grabs; if blockchain can protect all 21 million of those, what are the chances of securing, say, 1,000 records in a hospital's private blockchain? We're quite sure it's substantially easier to detect any fishy activity on such a smaller scale.
So it's immune to cyber-attacks?
Technically, no. But if you really want to push your luck, well, good luck: to put it bluntly, you practically have to simultaneously attack all records for a chance to make your siege successful. It will take skill to actually mess it up.
"The mere fact that a system works like Bitcoin - as many cryptocurrencies do - doesn't mean it's just as secure. Even when developers use tried-and-true cryptographic tools, it is easy to accidentally put them together in ways that are not secure," says Neha Narula, director of the Massachusetts Institute of Technology's Digital Currency Initiative.
"Bitcoin has been around the longest, so it's the most thoroughly battle-tested."
Keep one thing in mind: while there have been cyber-heists involving cryptocurrencies, it's the cryptocurrencies themselves that were breached - not blockchain itself.
Okay, what's a distributed ledger?
It's basically the database shared among all users in the blockchain. Think of it as an Excel spreadsheet with everyone having access to it. Any changes or additions made to it are seen by everyone in no time.
Wait, 'no single centralised authority'?
Yes. Put it this way: when you remit money back home, you need to go send it via a bank or remittance centre - the 'middleman' in the transaction. Blockchain allows you to send your funds - cryptocurrencies, in this case - directly without that middleman, which is essentially the 'authority' here. Instant payment, basically.
This is the reason why cryptocurrency advocates are pushing for their product: no central bank, government authority or financial is required to validate or approve cryptocurrency transactions.
You mentioned a hospital earlier; isn't blockchain only for cryptocurrencies?
Dead wrong. Blockchain was, indeed, first used big-time in Bitcoin back in 2009 (though the concept was first brought up in the early-1990s), which naturally gives the notion that it can only be used for that purpose.
However, with the secure environment blockchain offers, it's a no-brainer that it can also be utilised in other industries. Finance is one of the sectors in which blockchain is making waves, and it does make sense because of two factors: it involves money and the need to secure it.
The healthcare industry, meanwhile, has attracted the attention and interest of blockchain-based product developers in a "significant and commendable way", according to Dentacoin.
"Over the last couple of years, blockchain products aiming at leveraging the healthcare sector have mushroomed from various parts of the globe, with some making a powerful impact and growing speedily. These achievements underline the potential and promise that development of blockchain products will improve the sector."
Practically any industry, as a matter of fact.
"Investments in blockchain have captured the interest of business leaders and governments, as it has the potential to significantly transform markets and industries - from banking to government to healthcare and more," says Necip Ozyucel, cloud and enterprise business group lead at Microsoft Gulf. He added that blockchain would drive "real business, economic and social value to the world".
Dubai wants to leverage it
The Dubai Blockchain Strategy aims to continually explore and evaluate the latest technology innovations that demonstrate an opportunity to deliver more seamless, safe, efficient and impactful city experiences. It also believes that by adopting blockchain technology, Dubai stands to unlock Dh5.5 billion in savings annually in document processing alone - equal to the Burj Khalifa's worth of value every year.
Not only that: via blockchain, Dubai would be able to transform over 100 million documents into digital transactions per year, redistribute up to 25.1 million hours of economic productivity in saved document processing time and even save up to 114 metric tonnes of carbon dioxide emissions from trip reductions.
And it is indeed picking up in the emirate. At the Dubai Chamber of Commerce and Industry's recent Dubai Smartrepreneur Competition.
"We could not have been more impressed with the high volume of impressive business ideas related to blockchain, artificial intelligence and digital transformation," said Hisham Abdullah Al Shirawi, 2nd vice-chairman of the Dubai Chamber.
"These unique concepts greatly support Dubai's Smart City vision, while they are also a reflection of the innovative and entrepreneurial spirit of Dubai's business community."