What is blockchain? Biggest invention since the internet
“Everything will be tokenised and connected by a blockchain one day.”
— Fred Ehrsam
Recently my mother asked me: “What's all this fuss about blockchain and cryptocurrency?” The question my mother asked is part of a broader discussion that is now happening in homes across our island every day. And here are my thoughts and views on the Bermuda Government's approach to something that we believe will one day revolutionise the way we conduct business.
In his speech in late November last year, the Premier, David Burt, talked about Bermuda putting in place a regulatory framework for distributed ledger technologies. More recently, the notion of transferring our island's outdated deeds-based land registry to a “blockchain” was stated as being on the horizon.
Blockchain powers cryptocurrencies such as bitcoin. But what does all of this really mean?
As a starting point, think of blockchain as simply this: a digital database. A database is used to record information, transactions or events. Nothing is recorded manually; it is all kept using the internet.
The database is networked, which inherently is the basis of the internet itself. So within a particular blockchain, or database, everything is connected to and with each other.
It is spread over a network and, as a result, everything is decentralised.
From a financial perspective, for instance, there is no central bank which monitors the use of bitcoin, or which can issue more bitcoin. The network that consists of a blockchain is numerous computers — or “nodes” — which receive a copy of the blockchain.
The network consisting of these “nodes” is also secure. That is because for a new transaction to enter the blockchain, it must be validated by the network. That transaction, called a “block”, is linked via a process called “cryptography”, which links it to the one preceding it.
Using this highly complex method, it basically boils down to this: an attempt to tamper any transaction or block would require one to change all of the data in all the other blocks linked to it. One change will change all of them.
The first most obvious use of blockchain — or the more generic “distributed ledger technology” name — is financial. The cryptocurrencies and bitcoin, you have heard and read about.
But the real beauty of blockchain is that just about every transaction that is capable of being recorded in a database can use this technology, and just as the Bermuda Government wishes to use the technology for its land registry in the future, one can see its potential is obviously not limited to financial transactions.
It is the non-financial uses of blockchain where it has been said the next big leap in technology since the internet has arrived. The potentials are virtually limitless, but would include matters such as the following:
• Bermuda is looking to move its land registry on to its own secure blockchain network, where property records can be kept safely, securely and accurately stored and maintained
• Healthcare/medical records. This would be a blockchain where things such as patient medical and hospital records, and insurance claims and data information could be safely kept and securely shared with both healthcare providers — for example, your GP — but also with hospitals in and outside Bermuda, as well as health insurers. The storage and sharing of this data would save a huge amount of effort and hassle when having, for instance, to file claims or to move from one GP to another.
• Transport and shipping. The ability to easily track goods — in particular, say, food — over a blockchain is something that companies such as Maersk are already using. Essentially, by having the goods' data being tracked on the secure network, they cannot be tampered with.
• Data storage. Using blockchain technology will mean that cloud storage — ie, data storage that is kept online over the internet, rather than using physical devices such as hard drives — will be increasingly used.
• And close to the heart of any politician, there are the potential benefits blockchain brings to governance in general. There are two aspects to this. The first is transparency in the voting process and the second is anonymity, ie, a voting system where voters can anonymously select candidates. Importantly, their votes are accurately recorded and cross-checked. Voting may eventually be done online or using smartphones as well.
We have already entered a new age of technology, and we cannot turn back or look away from it.
And the good thing is that Bermuda is already priming itself very quickly to take advantage of the opportunities that blockchain can create for the island.
We are ideally suited to being a hub of innovation, using this technology to benefit all sectors of our economy.
We are moving swiftly but very carefully in this space.
We are mindful of the pitfalls and potential risks to our global business reputation.
At every stage, there is a keen focus on the anti-money-laundering, know-your-customer element of blockchain technology.
Bermuda will be partnering with the world's leading KYC and AML blockchain technologists. Our hard-won reputation will be safeguarded — nothing will be allowed to jeopardise that reputation for the sake of expediency.
We believe that blockchain technology will be significant globally and represents a modern industrial revolution. Our goal is to see Bermuda take a leading role in advancing blockchain technology commercially — from an educational perspective and as a way of employing Bermudians, bringing the best minds to Bermuda to live and to work.
• Wayne Caines is the Minister of National Security and the MP for Devonshire North West (Constituency 14)