Welcome to the Blockchain AMA!

[Adam White]

My first question: What is blockchain and how does it apply to the non-financial industry?

[#2]

Adam, we have seen scenarios in supply chain where customers are interesteed in keeping an immutable record of the parts/steps/components for a product. We have also seen healthcare scenarios

[#3 · Accepted solution]

Hi Adam - nice to see someone else in the Cotswolds with an interest in Blockchain. Blockchain is a distributed database where a consensus algorithm is used to settle on a single version of the truth. Everyone has a copy of the database and, depending on the implementation, may be able to participate in the consensus process. What you get is a very resilient, immutable database well suited to recording transactions between multiple parties. Outside of finance, it lends itself to anything where an audit trail is important, eg tracking provenance, supply chain management etc

[#4]

This is a great video that talks about the technology developed by the UK government - https://www.youtube.com/watch?v=4sm5LNqL5j0

[#5]

Hi Adam - thanks for the question! Blockchain refers to a set of technologies that enable a network where each node on the network has a identical copy of a ledger, and where network participants can only write to the ledger (and not delete or change anything). The first main application of the technology was Bitcoin, a digital currency that is supported by a public blockchain network. But there are many other blockchains that support private networks. There are lots of use cases; in general, situations where parties or individuals have to work together, and would benefit from a single shared set of immutable data that they can work from, that any party could contribute to. So scenarios where companies make purchases from suppliers, and want to know the status of a contract or payment, the state of a raw material or component, or the history of an ingredient or data source - all of those scenarios can be addressed with a blockchain application. So it's a powerful technology that has broad applicability in a lot of different industries.

[#6]

And the report they produced was also very good: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed...

[#7]

Venture Beat has an article about how Blockchain may impact the music industry. http://venturebeat.com/2017/01/07/blockchain-could-completely-transform-the-music-industry/ It's a category rife with outmoded business traditions and middlemen but at a point where they are less central, due to innovation like Blockchain.

[#8]

It allows parties to cooperate without trusting eachother. It provides a permanent, tamper-impervious way of conducting business and producing a trail of activity.

[#9]

From a very simplistic view - will the blockchain not become "too large" at some point if every node has a complete ledger (audit record)?

In banking and settlement, surely having billions of transactions a day will create a massive chain?

[#10]

Blockchains themselves are really not designed for high transaction rate applications - they are optimised for creating a reliable consensus within an untrusted environment. That said, there is a lot of work going on in this area. For example moving work off the chain itself but maintaining a trust relationship (you'll see cryptlets mentioned in other posts) could help in this regard as well as bringing other benefits.

[#11]

Size of the ledger is certainly a concern and it is possible that for high-throughput systems the ledger could be too large for a node to hold locally.  That said this issue isn't unique to blockchains btw - it exists for any log-based system.  I suspect we'll be able to use the same techniques to solve the problem here as we do for traditional databases.

There's work going on across the industry on sharding of the ledger, which would complicate the programming model but would enable nodes to participate in a subset of shards and thereby limit the data they need to store.

Another pattern that we've talked about is to use storage services like Azure Storage or Azure Data Lake to store older blocks.  As blocks are processed and state updates are applied, the set of past transactions need not be accessed frequently - so they could be moved off to external storage.

[#12]

So in finance - trading a share, each share has a blockchain, providing the single version of the truth; rather than a whole institution - which would aggregate lots of smaller blockchains?

[#13]

You also have to think about the "system" in terms of participants and who has a vested interest in making it viable / successful. For Bitcoin that's the miners who are financially incentivised to play by the rules. For share trading, it might be the financial institutions or (setting regulation to one side) you could envisage broader participation through stock market membership. Dividing-up the problem might help but fundamentally trading / retail systems are going to be a challenge. Aggregating transactions and shifting work off the chain (which processes transactions across all nodes and it thus very computationally expensive) could massively increase potential throughput. Whether or not it's enough for FTSE / NYSE though? There are plenty of applications that don't have such demanding transaction throughput requirements that lend themselves much better.