Get over mental block for this technology| Professor Hui Kai-lung 27 Feb 2019
Professor Hui Kai-lung
Deputy Head of Information Systems, Business Statistics and Operations Management, HKUST
Lately, online renovation platform HKDecoman and fintech platform MoneySQ have teamed up to help homeowners monitor the progress of their home renovation projects through the use of smart contracts and blockchain technology.
This is only a small example of how blockchain technology can be utilized in our daily lives.
The world first became aware of the blockchain system in 2009, when the cryptocurrency Bitcoin was released.
Blockchain refers to a way of storing data in a "chain" of blocks.
These data blocks are connected in a sequential "chain" structure using their cryptographic summary called hashes.
A hash value is a number generated from some data that is uniquely associated with it; this function is one way and irreversible.
As two different objects are unlikely to provide the same hash value and any change in one block will lead to changes in all other hash values and alerting all parties involved, blockchain technology is difficult to manipulate and provides enhanced security.
Because of its power to facilitate trustworthy transactions without a trusted central party, blockchain technology could see plenty of applications outside the financial world.
For example, medical records can be stored in blockchain and shared with clinics/hospitals worldwide securely as an ample pool of data for research and service improvement for patients.
In fact, many companies and even some governments are planning to migrate or have migrated their services to blockchain, such as the e-residency program launched in Estonia.
In Hong Kong, the Monetary Authority launched a blockchain-based trade finance platform, eTradeConnect, developed by a consortium of 12 major banks last year for the trade industry.
But why haven't we seen more applications for the public to date, aside from Bitcoin and other cryptocurrencies?
It all comes down to incentives.
Some corporations are already pushing for "private" blockchain technologies, but data integrity would only be maintained by a single private enterprise or a group and does not differ much from existing offerings.
This in fact defeats the purpose of adapting blockchain as "public" blockchain technology, which thrives in a decentralized environment, often relies on the goodwill of all parties involved to expand in greater scale.
If a firm already invests in harvesting customer information for its own use, why should it share with other "free riders" by using a "public" blockchain?
And how should the privacy of the data be protected, given that laws and regulations vary among countries?
To conclude, blockchain may transform businesses, especially in settings where trust and data integrity are the top priority.
However, we will not be able to unleash its full potential without a good grasp of its characteristics and capability. It is time for business leaders to go back to the drawing board and sketch how blockchain can play a role (or whether it should play a role at all) in business applications, processes or innovations.
HKUST experts have their fingers on the pulse of a new age of science, technology and innovation