XX TECHNOLOGY
BLOCKCHAIN
ALL HYPE OR A GAME-CHANGER? Touted as the most significant innovation since the internet, the blockchain holds much promise and power, but among CFOs this technology is often misunderstood, distrusted, or even viewed as hype. So, is it time to jump in, or wait it out? By Ang Lloyd
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ccording 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.
What is the blockchain, exactly?
“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.”
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
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CFO MAGAZINE • CFO.CO.ZA
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.
