Tencent Africa CFO Tramayne Monaghan explains what blockchain is and why we need to get ahead of it.
According to the International Data Corporation, global blockchain spending among organisations is set to reach nearly $6.6 billion this year – already up by more than 50 percent in 2020, with the banking sector making up nearly 30 percent of 2021’s worldwide total. Much like artificial intelligence, the blockchain is fast becoming more of a business priority and less of a disruptive experiment, and it isn’t limited to cryptocurrency, either: digital rights management, smart contracts, physical asset sales, and supply chains all fall under this technology’s gamut.
“If we don't get ahead of it, we'll be washed away,” maintains Tramayne Monaghan, CFO and CIO at Tencent Africa. “One day you may be on the back foot because your biggest competitor embraced the blockchain and you didn’t. There’s a massive swell that's building.”
What is the blockchain, exactly?
Blockchain technology was created in 2008 by Satoshi Nakamoto – an individual (or possibly individuals) whose identity remains a mystery – as the transaction ledger for Bitcoin. Not to be confused with the cryptocurrency, the blockchain is what Bitcoin is built on. Essentially, it is a distributed (shared) ledger on a network that allows its members to record the origin or trade of any digital asset. The ledger is immutable, meaning that an asset’s records, like transactions or tracking, can’t be changed or deleted.
Records contain ‘blocks’ of data with timestamps and an encrypted code called a hash. Each block builds on the next using a new hash that contains information about the previous block – this creates a ‘chain’ of encrypted data. For a block’s information to be altered in any way, a consensus among the network’s members must be reached, which makes any changes incredibly difficult to implement and eliminates fraud.
The blockchain is decentralised, so no single entity or third party has control over transactions or records. It also allows for immediate, transparent, and permissioned peer-to-peer interaction, and new data can only be added after it’s verified by everyone in the network. Each transaction is only recorded once, and if there is an error then a new transaction must be added to reverse it, and both transactions are then visible to the network.
In simple terms, a distributed ledger is like a shared-access Google sheet or a torrent download (if you remember those heady, pirated, pre-streaming days). “You're dealing with data from a multitude of devices at the same time, so no one person stores it at any one time,” explains Tramayne. "Pieces of information exist on multiple servers in multiple forms that can't be changed or reversed but are distributed – it's everywhere and everyone who has permission to be on the network has a copy.”
Read more: Special feature (Part two): Blockchain – From blood diamonds to digital identity
You can read the full Special Feature in the third edition of the 2021 CFO Magazine.
