Blockchain: What’s the hype about blockchain
How does blockchain work?
Blockchain technology refers to a cryptographically secure and decentralized database. This can be useful in a number of ways. This database, also called a ledger, enables the parties to carry out and confirm transactions without the need for a central settlement authority. This means that payments can be processed not only in a frictionless way (without the need for multiple intermediaries), but also faster, within seconds, as opposed to days. Blockchain provides a way to minimize mistrust and inefficiency.
The technology has the potential to drastically change the way we transact and think about digital ownership, all powered by shared ledgers and tokenization. Blockchains rely on a network of computers called nodes to keep them updated. The nodes can be controlled by one or more parties. When the nodes are controlled by several parties, this creates a decentralized network. Because the data is not controlled by one individual or organization, it is more reliable, trustworthy and transparent to the network participants.
For new data to be entered into the blockchain, all nodes must agree on it. So blockchain data cannot be easily tampered with, making it more accurate and reliable. All data in the blockchain is digitally signed. This authentication can show who created a given data entry or the current owner of a resource. Blockchain networks can be public or private. In a private blockchain, only verified participants have access.
What are some new use cases?
JPMorgan Chase has invested in the use of blockchain in our business since 2015, and last year we successfully completed cross-border transactions on a privately approved blockchain network. We’ve even taken blockchain into space to conduct test transactions between satellites. Blockchain has applications not only in finance and banking, but also in all other industries.
The next set of blockchain use cases will be an amalgamation of technologies, including enterprise tools, AI and ML. This poly-technology approach will allow us to get to market faster and leverage enterprise-proven technologies. Interestingly, when I started my career in technology many years ago, everything was about data, and decades later, it’s still about data. The future of blockchain technology is for those practitioners who are well versed in managing, distributing and securing data. These engineers must make meaningful decisions based on business value and not on ambitious technology visions.
The development of blockchain technology has resulted in transformative new paradigms such as Web 3.0, DeFi, and NFTs. Web 3.0 is a blockchain-integrated internet with greater privacy, governed by a decentralized community, with AI enabling more user-tailored content. It will unlock the possibility for people to “live” in the digital universe. Users will use digital asset wallets that integrate social networks and facilitate future communities (metaverse, avatars and NFTs). DeFi, or decentralized finance, is a set of products and services offered through decentralized applications, which allow users to use financial services without relying on centralized entities. Non-fungible tokens (NFTs) are unique digital assets with distinct properties on a blockchain ledger. These can be used to represent other unique assets, either in the digital or physical world. NFTs enable a whole new way of creating and monetizing “loyalty” and “community”. Collectors use NFTs to trade anything from digital art or even a tweet.
What skills are required to create blockchain solutions?
A thorough understanding of blockchain and blockchain architecture is a must. Extensive knowledge of data structures is essential. Smart contracts have also become a popular requirement for blockchain developers along with knowledge of cryptography. Those who want to become blockchain developers need to become proficient with these skills.
Suresh Shetty is CTO for Onyx by JP Morganwhich has launched several unique blockchain-based solutions in the bank
