Why is it proving to be such a hot topic and why is it getting so much media attention? Market research published via ReportBuyer expects that by 2022 the global blockchain business will be worth $7 billion, and there seems to be good reason to believe that this will be an accurate prediction.
Heavyweights like IBM have been quick to get involved - creating a blockchain platform capable of serving the banking, healthcare and logistics sectors, and even government operations. Facebook has appointed a top executive to oversee its blockchain activities.
What precisely is blockchain?
In simple terms, blockchain is a way to securely record transactions of digital assets that are distributed over the network without going through a centralised, authorised entity (see figure 1).
It was originally developed for Bitcoin cryptocurrency transactions, but is now be applied to many other market segments, including, for example, the insurance industry. Let us illustrate this with the use case of an insurance claim for a traffic accident. The process comprises filing in the claim, verification of the identity of the policy holder, the details of the accident from all parties concerned, approval of the claim and ultimately the settlement (including pay-out in a fair and timely manner).
Blockchain can easily streamline this process, thereby reducing the cost and length of time taken to deal with the claim. A blockchain-formatted insurance contract can be stored over the Internet and made accessible to authorised users. Once the claim is initiated, the verification of the terms of the policy and the accident details (plus any police documentation) can be checked simultaneously, since the information is securely available to the appropriate parties. Once the claim is settled, the pay-out is done automatically and the electronic records of the settlement concurrently distributed to the parent insurance companies, the independent insurance agents and the drivers.