Blockchain technology has been shaking up the financial sector for some time now, gaining both prominence and presence throughout society. Blockchain involves thousands of individual nodes – meaning thousands of users – that form part of a distributed network responsible for validating a given transaction, including its integrity, validity and relevance, the parties involved, as well as the security of both ends of the exchange, among other key criteria.

While it’s true the concept of blockchain eliminates the need for intermediaries altogether, making it a key feature in the use and price of cryptocurrencies – and simultaneously making it less popular with banks –, blockchain technology can be applied to a vast range of fields, beyond those that are strictly economic.

Fibre optic operators telecommunications companies and even some governments are already looking into how to be part of this market. In a relatively short period of around the next ten years, by which time experts believe its rollout will have become widespread, blockchain will be called on to focus in on customers and transform, among other things, wholesale distribution chains, internal process optimisation, product and services exchanges and, ultimately, the competitiveness of many industries.

What is blockchain and how does it work?

In blockchain technology, transactions – or any information exchange, actually – involve a sender and a receiver, obviously. But they also involve the thousands of people who form part of the network of nodes the sender and receiver belong to. The sender suggests a specific exchange, which forms a block.

The block then becomes part of a chain of similar blocks, i.e. other transactions that are awaiting ‘verification’. It’s this network of users that checks the characteristics of these blocks, making sure the sender is who they claim to be, as well as the transaction information, the identity of the receiver, and other key details that attest to the validity and security of the exchange.

That block is then registered on the blockchain. Until the block has the approval of the entire network – its ‘seal’ of approval – the receiver won’t be able to access the block with the information that’s been transferred to them. What’s more, blocks are permanently linked to their chain, so to modify them, you’d have to do the same with all the other ‘links’, which means checking and sealing every one of them.

Blockchain beyond cryptocurrencies

Blockchain technology is popularly associated with cryptocurrencies, but let’s not forget we’re only talking about exchanging ones and zeros here. And blockchain is simply the technology that facilitates these exchanges, not the actual content of blocks. It’s about data exchange, and not necessarily financial data.

According to a study by Global Data, lots of telecommunications firms are now working together on pilot projects. Their goal is to be able to use blockchain networks to increase the efficiency of settling wholesale rates between operators. According to analyst Lorenzo Solazzo, wholesale rates, such as interconnection fees or roaming charges, are prone to discrepancies that can take up to 30 days to resolve.

A platform based on blockchain would speed up these settlements, saving processing times and costs. And this dynamic could be replicated further, not just in the telecommunications sector, but in any other line of business where secure and encrypted information transactions are required, updating lots of value chains and increasing market competitiveness at the same time.