Blockchain and distributed ledger technology have its most obvious use cases in finance, but since it’s virtually unhackable it will go far beyond that. It will change the world of music and sports, modernize the sphere of energy and make us no longer have to worry about the loss of IDs, medical files, and documents. There are already many cases in business when transactions were conducted and certified on a platform that did not require any central management and at the same time remaining resistant to fraud.
Blockchain in Simple Terms
First of all, let’s figure out what Blockchain is. Forget about files, computers and the Internet. Just imagine three school friends gathered to exchange things. Jack has a candy bar, and Jill has a coin. Jack and Jill are ready to make an exchange. But to make it official, they ask a third friend, John, to take notes of the exchange in a notebook. And there appears a note: at a specific date and time, recording when Jack handed Jill one candy bar in exchange for one coin. After that, all the friends write down their signatures.
The next day, Jack and John found some other things to exchange. For example, say they exchanged Jack’s toy car for John’s Dad’s binoculars. It is important that they perform the operation according to the same scheme: they make a record in a notebook, under which all three again put down their signatures. This time the record is slightly different from the previous one. It reads: “Yesterday we exchanged a candy bar for a coin. Today we decided to hold a new exchange … “. The next time they decide to gather for another exchange, they make a new record in the notebook, and they will also mention the previous operation.
At one some point John’s Dad notices the loss of his binoculars. It turns out that the binoculars were exchanged for a toy. Naturally, there is a requirement to make a return exchange. And together they go to Jack – but he, frightened, starts to deny everything. That’s where the notepad comes in handy: a silent witness of all operations. The notes in the notebook have two remarkable properties. First, they cannot be faked, because of the handwritten signatures of all three friends. If one of them wanted to make a fictitious entry there, he would have to forge both signatures – which is nearly an impossible task for a child. Secondly, they cannot be faked, because every next record mentions the previous one. So, you can not just put something else in between the second and third operations – it becomes obvious that there is fraud.
Thus, John is able to prove that the binoculars really went to Jack. And after some understandable frustration, all things return to their former owners. And they also write about this in a notebook by the same rules: mentioning the previous operation and having it certified by all the participants.
Blockchain, e-Signature, and Legality
And now let’s try to apply this principle to real-world business problems. Imagine an institution where an important digital document is stored: a file on a computer that is bound not to be changed, by people or viruses, during storage. How can you guarantee its security?
You can make a copy and hide it in a safe. But the attacker, having a specific set of skills, is able to break into the safe. Maybe, it is better to make a few copies and distribute them for storage to different trusted people? This does not guarantee safety because the copies can also be found and changed. You can print the document on paper and notarize it, but that can lead to a mistake while printing, a page being skipped, or even to, in theory, a notary accepting a bribe.
Finally, the most advanced users will sign the document with an electronic signature. If your electronic document is certified with an electronic signature, it is no longer necessary to certify the authenticity and fidelity of the copy by the notary. Certification of the signature and notarization of the transaction are two different actions. For now, we are not talking about selling your apartment in one click via email. But if a document was scanned and digitally signed, then such an electronic document is equivalent to a notarized copy.
And you too can easily use Blockchain, which will give an absolute guarantee of safety and will make storing your documents easy. The most pleasant thing is that all operations are performed automatically: you don’t need to bother with numbers or understand the intricacies of algorithms.
Where e-Signature and Blockchain Collide
With commercial software products that involve e-signature and blockchain technologies, so every piece of data encryption, validation, storing and tracking is literally reduced to a “drag and drop” method, or even completely automated.
- Social benefits: Blockchain and e-signature will help to ensure and streamline the public administration of social benefits. Especially when it concerns the distribution of aid and social security. GovCoin Systems Limited is working on support tools for the government of Great Britain to distribute social security checks and social benefit packages.
- Banking: The verification of transactions can be made without intermediaries and electronic accounting. Banks primarily serve as safes and transfer centers, and the blockchain as a digitized, secure and damage-protected register, is able to perform the same functions. With this technology, the Swiss bank UBS and the British Barclays have already shown some incredible results.
- Payments and money transfers: Will happen faster and with less commission. Blockchain allows you to bypass heavy translation systems and create a more direct flow of payments that connects payers and recipients within a country or across borders, without intermediaries, with a very low commission and almost instantaneous speed. All the while, e-signature can easily and legally verify the sender and the recipient.
- Cybersecurity: Blockchain and e-signature are more reliable than many traditional systems. The systems of hashing for electronic signatures guarantee that the signature on the document cannot be forged. Blockchain’s main register and data transmission occur using advanced cryptographic methods, thus making it safe to store and track all of the data.
- Voting: the forgery of the results will become impossible because the process will be controlled by the users themselves. During any election establishing the voter’s identity is a must. The safekeeping of the records and the tracking of the votes determine the legibility of the winner. Blockchain and e-signature can easily become the safest environment for voting and determining the results. The problem of scammers, lost records and fraudulent results will immediately disappear with the use of e-signature and Blockchain.
Tools created for one particular sphere, in due course, pass into the others and make them more effective. Everything depends only on the desire to adopt new technologies and enough imagination to envision how they are able to modernize all business and life dimensions, making them user-friendly, safe, precise and easy to moderate.
