Blockchain Technologies

The company specialises in information technology with a focus on “blockchain” systems and related software applications which are rapidly evolving technology, new industry / regulatory standards, customer demands, heavy competition and frequent new competitive products being developed.

The company’s blockchain strategy focus is reflected predominately in its Bitcoin blockchain activities and related software applications (including using computer capacity to undertake the “Mining” of new Bitcoins).

What is a Blockchain

A Blockchain is a decentralised database, register or ledger containing a record of data or the chain of transactions (such as exchanges or transfers of Bitcoins) which is updated and shared instantaneously across a network of participants. There is no central monetary authority or government support for, regulation of or control of the database / ledger.

The objective of a Blockchain ledger is that it provides a transparent and permanent ledger (or register) of the chain of transactions in respect of a “digital token” and this ledger is anticipated not to be capable of alteration. As such, the ledger contains an accurate record of every transaction in respect of the relevant digital token or digital asset ever executed on the specific Blockchain.

However while the Blockchain is intended to limit the ability of unauthorised alteration, there have been examples where applications related to Blockchains have been hacked or not prevented unauthorised alteration (see section 4.6 below). This is an important consideration as the primary objective of Blockchains is that they present a register or record which is not capable of unauthorised alteration – which is a key element to public confidence in the relevant Blockchain.

What is Bitcoin Blockchain

The Bitcoin blockchain is one application of Blockchain technology. It is underpinned by a peer-to-peer computer network made up of various users’ computers and provides a de-centralised ledger of transactions or transfers of Bitcoins.

Bitcoin is often referred to as a form of cryptocurrency or digital currency because it exists purely in an electronic form.The Bitcoin blockchain uses cryptography for the purpose of regulating the creation of new Bitcoins and verifying their validity, with the objective of facilitating an effective and secure ledger to record the transfer / exchange transactions of Bitcoins online. As stated, Bitcoins are not issued by a central authority but generated according to a predefined and publically known protocol – a Bitcoin has no intrinsic value of itself, its value reflects public confidence and the number of Bitcoins in circulation.

Bitcoin can be seen as a peer-to-peer system using Bitcoin tokens that does not require an intermediary or government involvement. The use of Bitcoins is facilitated through a Bitcoin Wallet. A Bitcoin Wallet contains the Private Key which is a confidential piece of data that authenticate a person’s right to transfer Bitcoins through a cryptographic signature. A Bitcoin Wallet function is similar to a physical wallet in that it shows the Bitcoin balance and permits the Wallet owner to make specific transfers.

Blockchain Applications

A Blockchain with its decentralised ledger enables trading or transfers to take place on a cross-jurisdictional basis – potentially facilitating the transfer of any digital asset. The Bitcoin blockchain (and its associated infrastructure) is only one example of a Blockchain application.
There are anticipated to be many other possible applications of Blockchain technology to facilitate the electronic transfer of digital data, digital assets or tokens in a secure ledger (including potentially – electronic money transfer, electronic transfer of securities / shares, licensing, voting, and registration of any asset).
Taking the current financial services industry as an example, most applications and infrastructure exist in financial services are centralised with communication protocols and governance. Blockchain now provides an alternative option which enables public and distributed trust which has the ability to lead to secure data exchange that is simpler and easier between entities.

Other industries that Blockchain Technology will benefit include:

Government

Government departments are heavily involved in information exchange and providing citizen services. By linking the data between departments with Blockchains, this ensures instantaneous data transfer between departments, as well as citizens when consenting to data sharing, improving transparency between entities. Estonia is an example where the government has used Blockchain-based technology (keyless signature infrastructure) to authenticate data in their databases since 2013.

Defense

National security can be seriously compromised by unauthorised access or modification of critical defence infrastructure, such as operating systems and network firmware. One way to reduce the severity of an attack is by distributing defence infrastructure and computer systems in various locations. Blockchain technology ensures consensus-based access for modification across multiple data center, increasing security against attacks on important network and hardware equipment.

Energy

New energy initiatives such as home power generation and community solar power are filling in gaps of power supply across the world. Known as microgeneration of electricity, it is becoming a huge trend in the power generation business. Microgeneration, along with the traditional power suppliers, has contributed to the creation of energy markets. By registering the amount of energy produced and consumed on the Blockchain, it allows the provision of surplus energy to a different location, while providing credits or currency to the original producer. The credits can then be redeemed against the grid when the microgenerator needs additional electricity from the grid. These contracts can be enforced almost instantaneously through the Blockchain, allowing utility markets to be created with minimal red tape.

Healthcare

Through digital signatures via Blockchain-based data, access is only allowed when authorised by multiple people, thus regulating the availability and maintaining the privacy of health records. This database can be utilised by the community, including hospitals, doctors, patients and insurance companies, which in return reduces fraud in healthcare payments.

Law

Blockchains have the ability to contain huge amounts of data, including entire contracts. Smart Contract (protocols that facilitate or enforce contract performance using Blockchain) will have profound impact on industries as it is easily enforceable via electronic methods which eliminates the need for middleman, such as a legal firm, creating a strong escrow process by taking the control of contract validation out of a single party.

Find out more blockchain use cases in Blockchaincan.com

How does bitcoin mining work? 

Bitcoin “Mining” is undertaken by running a mathematical algorithm on a computer to verify previous Bitcoin transactions contained in a Block. As the miners (person who contributes has power) solves the next block in the algorithm, a Bitcoin is generated and rewarded in that user’s name.  

The operation of this mathematical algorithm uses significant computer capacity (and therefore requires significant investment in computer hardware plus electricity to operate the computers running the mathematical algorithm). The mathematical algorithm has been set up so that it becomes progressively more difficult to “mine” over time as there are more participants in the Bitcoin network.

The maximum number of Bitcoins the mathematical algorithm can generate and reward (using Mining) is limited to 21 million Bitcoins. As of 24 July 2016, 15.77 million Bitcoins have been Mined (out of the maximum of 21 million) and recorded on the Bitcoin blockchain. Traditionally the potential value of Bitcoins has reflected the difficulty / costs of running the Bitcoin mathematical algorithm, the scarcity or number of Bitcoins on the Bitcoin blockchain, but also most importantly public confidence in / use of the Bitcoin blockchain.

Bitcoin in real life

The number of confirmed transaction on the Bitcoin Blockchain has increased over time and in 2016 has averaged 200,000 per day. As at 31 July 2016, Coinmap.org had over 8000 retailers with a physical presence listed on its website that accepts bitcoin. A second Bitcoin website Coinbase.com records 44,000 business have registered with it (including online business). 

As at 31/3/16 there had been US$1.1 billion invested in Bitcoin and Blockchain technologies globally. Large financial service companies have participated in these investments as the technology has uses across a broad range of financial service providers including stock exchanges, banks, payment providers and insurers.