The Blockchain Evolution
Many people associate blockchain with the cryptocurrency Bitcoin. Yes, it is true that it was the success of Bitcoin that gave the world insight into the blockchain technology. But Bitcoin is just one example of blockchain application. Many other sectors can immensely benefit from the blockchain technology. Businesses, in particular, could take advantage of this technology to reduce their costs and increase accountability.
Blockchain technology started life as a protocol that recorded bitcoin transactions between two individuals (mostly unknown to each other). It was developed in a way that would allow bitcoin provenance to be validated, would avoid double spending and in which an immutable ledger would be constructed and maintained by multiple non-trusted parties, without a central authority governing it.
The biggest benefit of blockchain is that it enables multiple connected databases or data sources to communicate with each other with little need for human intervention nor a central authority overseeing this process. It allows multiple writers to agree on a chronological, transparent and auditable ‘history of truth’ that is encrypted and believed to be incorruptible.
The marine industry are now using Insurwave, a blockchain platform to support marine hull insurance. Global businesses can use the platform to transform how they manage risk across their organization, and how they work with brokers and (re)insurers.
Insurwave was built by a joint venture between consultant EY and blockchain developer Guardtime using distributed ledger technologies by Microsoft Azure infrastructure and following ACORD data standards. It will support more than half a million automated ledger transactions and help manage risk for more than 1,000 commercial vessels in the first year, according to its developers.
Lars Henneberg, head of Risk and Insurance for A.P. Møller-Maersk, said his company is looking to streamline areas of its industry that still rely on manual and often complex procedures. “Operating around 350 owned container vessels across the world, marine insurance takes up considerable resources for us,” Henneberg said. “Moving it to this platform is helping us automate manual processes and alleviate a range of inefficiencies and frictional costs in the way we have used to trade marine insurance.”
The basic advantages of Blockchain technology are decentralization, immutability, security, and transparency.
- The blockchain technology allows for verification without having to be dependent on third-parties.
- The data structure in a blockchain is append-only. So, the data cannot be altered or deleted.
- It uses protected cryptography to secure the data ledgers. Also, the current ledger is dependent on its adjacent completed block to complete the cryptography process.
- All the transactions and data are attached to the block after the process of maximum trust verification. There is a consensus of all the ledger participants on what is to be recorded in the block.
- The transactions are recorded in chronological order. Thus, all the blocks in the blockchain are time stamped.
- The ledger is distributed across every single node in the blockchain who are the participants. So, it is distributed.
- The transactions stored in the blocks are contained in millions of computers participating in the chain. Hence it is decentralized. There is no possibility that the data if lost cannot be recovered.
- The transactions that take place are transparent. The individuals who are provided authority can view the transaction.
- The origin of any ledger can be tracked along the chain to its point of origin.
Since various consensus protocols are needed to validate the entry, it removes the risk of duplicate entry or fraud.
- With the smart contracts, the businesses can pre-set conditions on the blockchain. The automatic transactions are triggered only when the conditions are met.