There is lots of talk about blockchain technology and how it will revolutionise the way we think about data, security and even money. But what is a blockchain?
It is a sequence of blocks containing data, records stored in the form of blocks. You can think of this process as a kind of database shared by a network of computers, where entries are added permanently as ‘Blocks’, and this ‘Chain’ cannot be broken or altered in any way. The resulting ‘Blockchain’ is a permanent, verified record.
Each block contains a unique code called a hash. It also contains the hash of the previous block in the chain. This makes the system transparent and secure through technology, with no need for any central controlling authority. It also means there is no single point of failure.
Blockchain was first released into the world in 2009 as the technology behind Bitcoin, the world’s first cryptocurrency, a kind of virtual money. The decentralised blockchain underpinning Bitcoin distributes the transaction data among all users, so it is not held in a single place.
Since 2009, a growing number of people and organisations have realised the power of this technology and many other cryptocurrencies have been created and deployed.
While this kind of ‘digital money’ captures most of the headlines, the underlying blockchain technology can be used in other contexts, like verifying online identities, securely transferring important data, improving voting mechanisms, monitoring supply chains and many more.
Newer developments, such as ‘smart contracts’, take the technology a step further. You can think of smart contracts as a type of computer programme (or set of instructions) saved on a blockchain. Smart contracts can be used to create self-executing agreements between multiple parties. This is opening up a range of exciting new possibilities for automating business processes and transactions in almost any industry or market.
For example, in the future, connected cars could automatically pay for tolls, congestion charges or electric charging (in the case of electric vehicles), using smart contracts and digital assets on a blockchain. In reality, the possibilities are almost endless.
The European Commission is working on a number of different initiatives to bring together and enhance Europe’s leading role in blockchain technology.
As well as providing funding for blockchain startups and innovation, the Commission has also launched the European Blockchain Partnership to develop a common EU strategy for blockchain and the European Blockchain Observatory, which pools expertise to identify and monitor activities across Europe. Another important development is the European Blockchain Services Infrastructure, which is the world's first cross-border blockchain initiative in the field of public administration.
In addition, the Commission supports various skills programmes, so that European citizens can access, use and develop blockchains and other technologies.