What is Blockchain?
Blockchain is a system that makes it possible to reliably exchange information or value between parties without the need for a third party such as a bank. Examples of blockchain applications are the conveyance of a house, applying for a mortgage, consumers trading energy or the exchange of cryptocurrency such as bitcoin.
How does it work?
Blockchain works on the basis of cryptography. Each block is recognizable thanks to its own unique 64-figure hash code, a type of DNA code. These hash codes are used to identify the transactions: to see what the transaction consists of, as well as identifying the parties involved in the transaction. In addition, hash codes guarantee that the content and sequence of the transactions cannot be manipulated. Each time information is changed, the hash code changes as well, not only in the block itself but also in subsequent blocks (i.e. across the entire chain). Any tampering with the information will therefore immediately come to light.
What can we do with blockchain and what are we going to notice as a result?
If the promises surrounding blockchain can be realised, every person in the Netherlands will be affected in some way. Many processes such as setting up a company, applying for a mortgage or individuals trading energy will become more efficient and that will save both paperwork and costs. One such example is the sharing of solar energy. If you have energy left over then you can trade this directly with your neighbours via a blockchain application, for example via a mobile phone or entirely automatically.
Another promise is self-sovereign identity that will give the user more control over his or her own data. You will be able to show the data needed for a certain transaction via an app on your phone. For example, a teenager who wants to purchase alcohol will only need to show the age data required and can keep other personal data hidden from view.
But blockchain is also interesting for sectors involving collaboration in chains. One such example is the transfer of cargo from a ship in a harbour. That involves many different parties. If blockchain can accelerate the transaction processes then considerable costs savings can be made.
Is blockchain used already?
Blockchain technology is still in its infancy. Companies and government bodies are using it on a small scale or are still working with prototypes because the infrastructure is not yet adequate. The Dutch Blockchain Coalition's role is to ensure that the infrastructure is reliable and secure, works well at the level of identities, and that education and training courses are set up in such a way that the Netherlands can eventually switch to applications on a large-scale.
What is the challenge that needs to be overcome to make blockchain a success?
The biggest challenge that needs to be overcome is making sure that the technology works properly at the level of identity. For each type of transaction, from applying for a mortgage to trading energy in the blockchain, it is important that the identity is correct. Is the person or organisation you are doing business with actually who they claim to be? The identities are currently not yet reliable enough. Several solutions are on the market or under development. The coalition is investigating these and is building and testing prototypes. Once things work well at this level, we can switch to application possibilities on a larger scale.