What is Blockchain Technology? Trust and the simple concepts | Part 1


What is Blockchain Technology?

Simply put, the blockchain is a network and/or a program that provides proof that things ‘exist’ and have happened’ and it does this in a way that cannot be corrupted through clever code. The benefit of this is that it creates ‘trust’ in a trustless environment both online and offline. 

More importantly, it is an ultra secure software system and that is visible, auditable and publicly available. In the case of public vs privacy, the latter is a private blockchain which is more intended for cost savings and efficiencies. 

supplychain blockchains

How can we trust other parties across different geographical locations?

Is there a real need for Blockchain?

When we comprehend the use case of this technology, this opens up a completely new set of tools for problem solving and creating opportunity where previously there was none. Later in this article we will break down some of the core tenets of Blockchain to help the reader understand why they should comprehend – What is Blockchain .

What does Blockchain Technology do?  

First, we need to understand that there are some simple and generic concepts of blockchain. This is not a technical explanation, moreover a way to understand the framework in which to apply our thinking. In the next article we will get a little more technical. For now, we want to understand what does blockchain do on a practical level - that is to prove without a shadow of a doubt that something has occurred. With this in mind, we can make an assumption about the ‘trust’ properties of the blockchain in a more generic nature. 

  1. Proof of existence
  2. Proof of non-existence
  3. Proof of time
  4. Proof of order
  5. Proof of identity
  6. Proof of ownership
  7. Proof of authorship

Proof of existence – The way in which blocks of data are created and chained together in chronological order makes them tamper proof. This means the data is time stamped and becomes proof that something has happened. Think – titles, assets registries, patents, etc.

Proof of non-existence – Conversely, this chain of immutable data also proves that something did not happen. Which is super helpful when programming algorithms and software calculations for the purpose of the application. 

Proof of time – When blocks of data are created in a chronological order they are appended to the end of the data chain (hence the term block-chain). Because the data block is time stamped it becomes proof that something happened at that specific moment in time. 

Proof of identity – Blockchain technology uses cryptographic hashing – which is a computing technology that is irreversible. To prove an identity exists need only happen once if it is on the blockchain. Think – Birth certificates, drivers licenses, qualifications, documents, titles rights and assets. 

Proof of order – When blockchain data is ‘hashed’ and time stamped in chronological order, it can no longer be tampered with. There is a sequential proof of events recorded on the Blockchain ledger. Think – documents, titles rights and asset ownership. 

Proof of ownership – The immutable nature of the blockchain ledger can provide proof of ownership of physical and digital assets. When the blockchain algorithm reaches consensus, the state of ownership is agreed upon and then irrefutable. Think – asset ownership, intellectual property, transfer of value,  etc…

Proof of authorship – This method of inputting data into the blockchain proves who was the author of that data (on the blockchain). Think – intellectual property, music rights, artwork, provenance and origin of physical products. 

These 7 generic patterns illustrate what blockchain technology is capable of handling. Moreover, we use these terms to gain a general understanding of the business case for the use of blockchain technology without needing to go into the technical specification. 

Is Blockchain Technology a good business tool?


One of the core tenants of blockchain is disintermediation. To explore this concept a little further, first, let’s look at the role of an intermediary. In most cases, an intermediary will be the middle-man. In finance, this may be the market maker on Wall Street or a trusted third party that handles transactions – like PayPal.

payment services and financial intermediaries
PayPal and Visa are financial intermediaries

Of course, there are other intermediaries such as those found in the manufacturing supply chain. For example, within the supply chain order there is the manufacturer, the wholesaler, the retailer and the purchaser. The two middle parties (wholesaler and retailer) are the intermediaries. Whilst in many industries the intermediary role has intrinsic value, in some circumstances, the cost of the intermediary can be reduced or even eliminated. This is where the process of disintermediation provides value above and beyond that of the intermediary role. 

Blockchain technology for supply chains and distribution channels
There are many intermediaries in the supply chain

So what does disintermediation involve and why is it beneficial?

In the examples above, these third party intermediaries handle the transaction of money, product and data. Importantly, they provide a layer of trust and accountability. This, of course, comes with both a financial cost and time cost (aka intermediary delay). However, in the case of a blockchain, that layer of trust does not rely on a third party. Because, the transaction can occur on the blockchain leger with absolute trust between the buyer and seller through the immutability of a blockchain ecosystem. Essentially, providing an automated rule-following machine in the place of the intermediary role. 

This is a valuable business case for blockchain technology and it serves well for financial transactions. However, what about the physical goods? Agriculture? Or manufacturing data and processes as in the example of the supply chain?

Cost efficiencies with blockchain 

The process of disintermediation can improve profit margins through cost and speed efficiencies using blockchain technology, and this is the main driver for adoption. For example, visibility of demand quotas, manufacturing quantities, dispatch and logistics can all be freely accessible for all participants involved. More importantly the visibility and access of this supply chain data, including permissions and rights to the data, can be controlled and the write access timestamped. All without compromising intellectual property or company sensitive data. Thus, making the whole process more secure, more efficient, and less wasteful.

blockchain technology in supply chain and manufacturing
Blockchain Technology can help manufacturing and supply chain business

Evidently, automation A.I. within blockchain could improve supply chain ordering, manufacturing, dispatch and delivery. However, does it completely replace the need for an intermediary? Or, the need for a human? In some cases yes, though the intrinsic value that the intermediaries provide (such as good service and a human experience) can be drastically improved with the use of blockchain technology. 

What Is Blockchain – In Summary

The blockchain is more than new technology. It is a process and computer processor, It is a store of value, a verification of data, and record keeping software all at the same time. Not only this, it is a paradigm shift in thinking and problem solving, one that once comprehended becomes your hammer – and everything you see becomes a nail.

The blockchain could be the next silver bullet to help business, primary industry and government initiatives survive and thrive over the coming years. Evidently, the Australian Government has provided us with a roadmap of activities and budget [2] planned for the next 5 years. 

Likewise, as professional UX designers and Blockchain strategists, we are welcoming this move towards the implementation of Blockchain for business and industry. We believe the business case for using blockchain technology is strong due to the cost savings and process efficiencies it provides and we will cover these topics and more, in upcoming articles. Stay tuned. 

Blockchain 101

Why did we create this 5 part series? Well it just made sense to us to join our creative ideas together. We have a passion for design and creative thinking, we have worked with different business models, technologies and ideas from around the world. The next logical step is to create a place where design thinking can be applied to blockchain methodology. For those wondering how these two topics align, this series is for you.

You are here > Part 1 - Trust and the Simple Concepts of Blockchain Technology

Read Part 2 - Blockchain Explained - An easy to digest technical guide

Read Part 3 - Blockchain Design - Why user experience matters

Read Part 4 - Is Blockchain the future? Uncovering the blockchain business model

Read Part 5 -  The Blockchain Generation - The path to adoption

Did you know?

The Australian Government has engaged with industry and researchers to develop the National Blockchain Roadmap to highlight blockchain’s potential and some of the opportunities that exist. Blockchain technology is predicted to generate an annual business value of over US$175 billion by 2025 and in excess of US$3 trillion by 2030.

[1] National Blockchain Roadmap for Australia
Australia to Spend $575M on Tech Including Blockchain to Boost Pandemic Recovery