Blockchain is a technology for recording transactions. And, since its first use in 2008 for cryptocurrency, it is emerging as one of the must-have technologies in many industry sectors. Project Managers will often be called upon to manage blockchain projects. So, what is a blockchain?
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This video is NOT about Crypto
This video is NOT about Bitcoin or other cryptocurrencies. Yes, they use the blockchain. But they are not the only application of this technology.
There are three main characteristics of Blockchain technology…
- It’s a database
- That is decentralized
- And keeps its data secure
The Blockchain Data
A Blockchain maintains a growing list of records of transactions or the movement of assets. We call those records ‘blocks’. Each block is permanently linked to the previous one, to form a chain of blocks… a blockchain. Each block also has a timestamp and data relating to the change or transaction it records.
The blockchain data are recorded across multiple computers – it is decentralized, or distributed. It uses a public ledger that all users can access. So, any change to a record on one computer can easily be detected. This means records cannot be altered. The network of computers is referred to as a ‘peer-to-peer’ or P2P network.
The links between blocks are secure. They are encoded with a cryptographic ‘hash’. This is like a digital fingerprint that cannot be decoded. Hashing involves passing the raw data through a complex mathematical function – the ‘hash function’. The resulting long number – or hash – is a unique representation of the data. Reversing the process to recover the data from the visible number, or hash, is so computationally complex as to render the coding highly secure.
Origins of the Blockchain
The principles of blockchain technology were first described in 1991 by Stuart Haber, W Scott Stornetta, and Dave Bayer. The first blockchain was created in 2008, as a record of bitcoin transactions. The software was developed by an anonymous person (or group of people) using the pseudonym Satoshi Nakamoto.
Uses of Blockchain Technology
Blockchain technology was originally used for cryptocurrency transactions – firstly, Bitcoin. And this is still the biggest use for this.
However, the core idea is so powerful that people are now developing it to serve very many commercial uses, including:
- Money transfers and currency exchange
- Payment processing
- Supply chain recording
- Tracking sources and processing in the food industry
- Providing digital identification, DID
- Copyright protection – including Non-Fungible Tokens (NFTs)
- Property sales and records
- Energy trading
- Patient medical records in healthcare
- Even voting
To justify all these uses…
What are the Benefits of Blockchain Technology?
There are four main benefits: transparency, reliability, security, and speed.
The process uses public records – albeit secured cryptographically. And blockchains are also built on open-source software.
Automation of processes increases accuracy, reduces the need for oversight, and therefore reduces costs.
Transactions are secured across multiple sites, reducing the possibility of tampering with records. And the data is secured by cryptographic hashing.
Automation and rapid settlements save time in the process.
So, with all these benefits…
What are the Downsides of Blockchain Technology?
Yes, there are implementation costs – blockchains use a lot of technology. And transactions can be slower than on more established software platforms. However, the main downsides arise from the reputation of blockchains – which may change as they are more widely used.
Currently, the best-known uses are in cryptocurrency creation and recording. This is both energy-intensive and little-understood by the wider public. The other category of wide usage that people know of is illegal transactions. The security of the system serves bad actors by keeping them and their transactions anonymous.
This leads to the biggest real downside. There is currently little regulatory understanding of blockchain technology in many jurisdictions. This doesn’t just affect cryptocurrency transactions. The legal status of blockchain records for legitimate commercial transactions is not always clear.
What Kit does a Project Manager Need?
I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own.
Note that the links are affiliated.
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