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The Importance of Blockchain

A summary of Blockchain and its market.

27 Sep 2021

What is blockchain?

Blockchain is a type of database – a collection of information that is stored electronically on a computer system. This is designed to house significantly larger amounts of information that can be accessed, filtered, and manipulated quickly and easily by any number of users at once.

Unlike a typical database, blockchain splits data into chunks that are ‘chained’ together – much like a literal chain. The system is inherently irreversible as a timeline of data as a user would need to undo all of the prior links to make a change to the data further up the chain.

The blocks create a decentralised chronology of data – with an exact timestamp and hash (unique reference using maths functions to turn the data into letters and numbers which match with the block prior to and following this). A hacker would therefore need to control and alter 51% of the copies of the blockchain to change the overall data.

As an example, assume a company has a large number of computers within a warehouse – each computer would hold the same blockchain and would be considered a node of the data. To make a change to one node would require changing the data in each computer. If one node had an error in the data, it can use the others as a point of reference to correct itself – making the data irreversible – allowing easy pinpointing of the node with the incorrect data.

What is the state of the market?

Some companies have already incorporated blockchain – including Walmart, Pfizer, AIG, Siemens, and Unilever. IBM has created its Food Trust blockchain to trace the journey food products take to get to locations – allowing easy tracing of the origin of food as well as problems relating to specific batches.

Currently this is largely reserved as a data storage system for larger, more well-funded companies. This is partially restricted due to the complexity of blockchain as a storage system and the requirement for large volumes of computers to ensure the integrity of the data network, but also due to lack of trust which has delayed adoption – as noted by PwC’s survey on the likelihood of trust affecting adoption at 45% of respondents.

Currently the scepticism has resulted largely due to the exposure of Cryptocurrencies, whose volatility has been highlighted over the reliability of the data storage system – being compounded by misunderstanding of the ways in which hackers have manipulated and stolen these currencies. These hackers have generally ‘attacked’ the crypto exchanges – targeting a group of individuals’ ‘crypto wallets’ to transfer the coins to themselves – rather than compromising the integrity of the blockchain.

However, Banks are beginning the process of adopting this as a medium to issue bonds – a more trusted equity – reducing risks around hacking, counterparty and settlement resulting from default, and saving costs of manual adjustment to bond or equity records – this is 3 years after the World Bank sold the first bond to be created and managed using blockchain.

What is the future of the market?

The future of the market it harder to define at its current state as the implementation of blockchain is largely limited to cryptocurrency at the current moment. However, IBM and other industry leaders have begun the process of using blockchain to encrypt and store data in a more secure way as to ensure data security in an ever-changing market – where cyber security is becoming a more important part of everyday operations.

Targets for those companies specialising in Blockchain include moving the market towards a more legitimate and mature stage in-line with the rise of internet and e-commerce usage – including applications for growing industries like gaming and space within the UK. As an example – Malta will become the first country to issue a licence for operators in this sphere – in order to introduce regulation to a largely unregulated market.

The increased focus around Environmental, Social, and Governance (ESG) of firms resulting from the well-documented impact of humanity on our planet will likely affect the way in which these firms operate as to ensure a minimal footprint. There are expected taxation changes by developed country governments affecting the usage of blockchain – which has aforementioned high-power usages to maintain a large network of terminals.

However, this is expected to be offset against the energy savings from time saved as a result of using automation of document and record keeping – as opposed to the current, largely manual process used by banks and other industries. Reporting requirements surrounding ESG could also be supported by blockchain technology – as a means to track the usage of unsustainable and sustainable energy usage.


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R.Wolfson, ‘Blockchain and Cypto leaders share their 2019 industry predictions’,

N/A, ‘IBM Blockchain solutions: Where blockchain for business comes to life’,

N/A, ‘PwC’s Global Blockchain survey’,

T.Stubbington, ‘Banks turn to blockchains to reform costly bond market,’

OECD, ‘Environmental Taxation: A Guide for Policy Makers’,

Gov.UK, ‘Environmental taxes, reliefs and schemes for businesses’,

D.Gayle, ‘Extinction rebellion blocks Whitehall in protest against HMRC and Barclays,’

R.Browne, ‘More than $90 million in cryptocurrency stolen after a top Japanese exchange is hacked’,

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