The Panama Papers: BlockChain, Or BlockChange???

Since the arrival of Bitcoin 8 years ago, we are still waiting to see if it will change the world; some prominent people think so, some don’t. Yet, one aspect of the technology being heralded as revolutionary as the internet, is BlockChain.

Or, "BlockChange" as I like to call it… 

You may not know anything about Blockchain now, yet it has the potential to change the way we do everything because it “decentralises” everything. That means Blockchain impacts you, and impacts situations such as financial and data security issues we are seeing now with release of the Panama Papers. And why you should read on…

When a transaction is made with Bitcoin, it is broadcasted out to thousands of Nodes who all make exact copies of the transaction. Once a certain amount of transactions are added, this becomes a block and is protected by cryptography. Each of these blocks connects to all the previous blocks, and before you know it you have a Blockchain all the way back to the first ever transaction.

Because all these transactions are copied, connected and all cross-checking each other, it’s difficult for a hacker to tamper. Changing one, would cause a discrepancy in the whole network.

It’s this “decentralisation” of information that’s key to the forthcoming Blockchain revolution.

In most Banks today information is “centralised.” If a hacker gets in, the potential to tamper or steel huge amounts of information can be disastrous. You just need to look at the Mossak Fonseca stories abounding now to see how insecure any centralised repository of data can be; 11million files all in one go!

Blockchain creates transparent, yet locked records of transactions and agreements that everyone can trust and believe. Crucially, it does this without compromising privacy. You can record the fact that the event happened, and even that it happened correctly, without exposing confidential details about the subject matter or the parties involved. This explains why Bitcoin enables black-market transactions; despite the public nature of the records or ledger, the users themselves can remain completely anonymous.

Ironically, it will be Blockchain that will be the criminals undoing, as ultimately the good far outweighs the bad. For example, one key emerging use of Blockchain involves “Smart Contracts.” You could rely on the decentralized network to confirm that a contract of any kind was executed properly and automatically, without revealing any confidential information about the parties or the transaction. Software already exists to enable this, and positive implications for trust and transparency of business dealings are enormous. Another positive clear example is the country of Estonia, which secures much of its banking infrastructure with a Blockchain and boasts the lowest rate of credit card fraud in the Euro Zone. I know for sure the Commonwealth Bank of Australia are Blockchain advocates, and in other areas, it's even being tested as a means for on-line voting.

Blockchains still have a long way to go before they replace all of our financial systems. Even longer before it has an impact on all of our decision making systems. Hypothetically in the longer term, where Twitter has enabled a communication revolution through consensus, so too Blockchain may be the backbone enablement of a true democratic, consensus based decision making process authorised by the masses. No need for centralised, governmental decision and policy making anymore… No more corruption?

For now however, it is a fact that Blockchain is coming. It will ensure our financial security, but it will radically shift organisational skillset requirements impacting organisations and business people / talent strategy’s for years to come and the subsequent need for transformational technology programmes will abound.

If you are intrigued as I am about the next breaking Panama Papers story, then just wait for what’s coming next as a result of Blockchain. Or rather, BlockChange…

Author Gordon Blake a Design Thinking, Organisational Change, Readiness & Communications Consultant, with ~20 years’ experience supporting Users to Senior Business Stakeholders on High Value Clients and Engagements as Trusted Adviser and Thought Leader on >just IT.

The materials on this site do not constitute financial or other professional advice. You should consult your professional adviser if you require financial advice.