Michael Choate Associates CPA

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What's New in Technology for March 2018

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Blockchain Technology - Beyond Bitcoin

Blockchain TechnologyTo many people, Bitcoin and blockchain technology are the same thing. Bitcoin might be the best-known example of a successful application of blockchain technology, but as soon as business leaders understood the power and advantages of the Bitcoin model, various industries, institutions and humanitarian organizations leapt on the technology as a solution to a variety of issues and challenges.

Most of us have some idea of how Bitcoin works. The concept was unveiled via a whitepaper in 2008 by a Japanese businessman whose real identity still is not known. “Bitcoin: A Peer to Peer Electronic Cash System” showed how a crypto-currency system could provide its users with a decentralized, time-stamped bookkeeping platform, or ledger, that was incorruptible, transparent and public, yet impervious to corruption or interference. It has also been described as an encrypted database of agreements – which means when the parties involved have made a deal, neither can go back and revise the terms. Smart Contracts is a blockchain-based contract system that requires all parties to fulfill their contractual obligations before the terms of the contract can be completed.

Hailed as a major innovation, blockchain technology – in the form of Bitcoin – made its entrance into the financial sector in January, 2009. Some nine years later, the technology is being used in many different ways – from aiding humanitarian relief efforts to improving the efficiency of government departments through the authentication, confidentiality and improved management of medical and benefits records. To help consumers understand how it works, some commentators have said that blockchain is to Bitcoin what the internet is to email. In other words, it is an electronic system. Application designers build programs to tap into its international reach. Bitcoin – a crypto-currency – is just one type of application.

Here are some of the other ways that blockchain applications are being used to address global issues here and in some of the poorest areas of the world:

  • Voter fraud and cybersecurity are hot issues worldwide. In the past decade, voter legitimacy has surfaced as a serious issue in major U.S. elections. Blockchain technology offers governments a way to provide its citizens with secure (unhackable) electronic vote-counting systems. Blockchain technology can provide a permanent and public ledger for voter registration; handle voter identification; and track voting to ensure there is no tampering at a later date.
  • In 2017, the United Nations faced “the biggest humanitarian emergency of our era” in Syria. One of the most successful efforts to assist those most affected involved a blockchain platform developed by the crypto-currency Ether, Datarella and Parity Technologies. This partnership bypassed the bureaucracy, inefficiency and corruption that frequently hobble international aid efforts by giving refugees direct access to financial donations to buy food and essential supplies.
  • Blockchain technology can work like a bank for impoverished people who do not have bank accounts. Unlike traditional financial institutions, blockchain crypto-currencies don’t levy hefty fees to transfer money across international borders. These traditional bank charges can inhibit business transactions in developing nations and impose financial burdens on individuals sending money to support their families overseas. BitPesa is a blockchain platform that can send and collect crypto-payments between Sub-Saharan Africa and the rest of the world. Africa is one of the costliest regions in terms of financial transfers. BitPesa users need only have access to a smartphone to use the crypto-currency platform. The BitPesa success story has made money transfer fast, affordable and reliable for migrants, immigrants and refugees – people hit hardest by poverty and displacement.

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