Blockchain Technology--Essential for Secure Virtual Currency Transactions, Including Bitcoin
In 2017, many news outlets covered the Bitcoin virtual currency because of its sharp increase in value. Lately, even commercials for Bitcoin are broadcast. Bitcoin's innovation is the use of blockchain technology to conduct transactions.
A blockchain is signed with the payer's digital key (private key). Anyone can verify the signature using the public key that pairs with a given private key. Electronic signatures are also used for the "My Number" identification cards of Japan's Social Security and Tax Number System and are known to be secure so long as the keys are managed appropriately.
Because each transaction is signed with a digital key, falsifying any transaction in the middle of a blockchain is difficult. This facilitates secure, transparent transactions at low cost.
Beyond Bitcoin, there are moves in other industries to use blockchain technology to conduct highly transparent, secure transactions.
Fujitsu has participated as a premier member of the Linux Foundation's Hyperledger Project, an international organization dedicated to designing blockchain platforms for business. Besides the financial sector, blockchain will likely widely prevail in other industries and business fields; the technology is expected to be used in many sectors in Japan by 2020.
The Parade of New Virtual Currencies Highlights the Transparency Issue for Transactions Across Currencies
As blockchains come into use in a wide range of fields, several blockchains may have correlations with each other.
Considering a real estate transaction, for instance, blockchain can replace the registry books that record land rights transfers. Few real estate transactions are exchanges of one piece of real estate for another. Instead, the majority are exchanges for cash, namely sales and purchases. When a real estate transaction involves a virtual currency instead of cash, the real estate blockchain and virtual currency blockchain have correlations.
As new virtual currencies continue to appear, exchanges of bitcoins with other virtual currencies are expected to increase in number.
Transactions across blockchains have created higher demand for security and transparency--this demand must be met.
Newly Developed Technologies to Safely Connect Multiple Blockchains
As part of efforts to address issues of the future, Fujitsu Laboratories Ltd. has developed two new security technologies for safely connecting multiple blockchains.
The first is an extension of smart contract technology, which automates paperwork and contract processing on blockchain. Generally, smart contracts could only be used in a single blockchain. This extension acts as a "ConnectionChain"" that connects existing blockchains via a new blockchain, thereby enabling a sequence of transactions to be handled. The key point is that connected chains are transparent because transaction legitimacy can easily be verified since the "ConnectionChain" uses the same blockchain approach.
The second is a technology for controlling multiple blockchains. Generally, it was impossible to put blockchain transactions on hold.
Returning to the aforementioned example of a real estate transaction that involves two blockchains, this technology enables the real estate transaction to be conducted in the following order: reserve the property to prevent it from being sold to a third party, transfer currency, wait for the payment process to finish, and then finalize the property transaction. If the currency transfer fails, the hold and payment can be cancelled, thus implementing a process equivalent to a hold on each blockchain; this enables secure transactions.
With these two technologies, transactions across blockchains can be made transparently with certainty.
Use Cases in Automated Currency Transactions and Business-to-Business Data Exchange
These two newly developed blockchain-related technologies will help promote e-commerce as well as automation of payment and contracting processes. Fujitsu Laboratories also aims to leverage these technologies to enhance the reliability of business-to-business data exchange.
In addition, these technologies are expected to help small businesses (e.g., small-scale online shops) support virtual currencies, and can further be used to offer benefits to holders of a particular virtual currency.
Going forward, Fujitsu Laboratories will further test these blockchain-related technologies to expand their business applications in the financial and various other fields, aiming for commercialization in fiscal 2018 and beyond.