Six months ago, I used the word “blockchain” at a meeting, and half of the people in the room quickly pulled out their notebooks to write the word, followed by several question marks. Today, not a week goes by without announcing a new conference on the blockchain (transaction log) and many of our customers call us to understand if this is an area in which they must s ‘inform. Now hashtags like #fintech and #insurtech regularly appear next to #blockchain on Twitter and LinkedIn.
It’s not about who the new unicorns and start-ups are trying to transform insurance, but rather what they do and how they do it. Many people believe that blockchain will radically change our world, but is this really the new Internet?
It is certainly not the magic bullet that will solve all of the problems in the insurance and banking sectors, but it can potentially correct many of their inefficiencies.
Blockchain increases transparency thanks to immutable audit trails and efficiency of self-executed processes.
What is blockchain?
Blockchain is a technology for broadcasting a digital transaction log. It offers total transparency by recording transactions between users, generally computers on a decentralized network, on a medium protected from any modification. It’s a shared, unbreakable and endless digital Lego brick tower that is copied to each user’s computer. Each brick has an incorruptible record of a transaction or contract. It is a block of information chain that continues to add chain links for each new transaction and cannot be changed in its transaction history. It can be used as an accounting ledger to record transactions that transfer value. Virtually any type of value. From crypto currencies to intellectual property rights, from real estate to diamonds.
In order for a new block to be created in the chain, transactions between two (or more) parties must be validated to ensure that they are genuine and authentic, which is generally done by “miners”. When enough “miners” have committed a transaction, it becomes part of the blockchain.
What is “sufficient” and who are these “miners”? It depends on how a blockchain system defines its protocol mechanism. There are different types of blockchains: private or public, with or without permission, and (very) many types of protocols. From the Byzantine generals to the Rafts and Paxos (no, I’m not talking about a vacation in Greece), when you seriously want to approach the blockchain, you start to wonder what language you speak.
This is my attempt to define a blockchain ABC for insurers in less than 800 words.
