The Disappearance of Blockchain

Blockchain has created a huge amount of buzz recently. Since its official debut in the market in 2009, talk about blockchain technology has snatched headlines across the globe. This technological innovation was the ultimate brainchild of the creator of Bitcoin (now worth over $10,000) who goes by the pseudonym, Satoshi Nakamoto. It was Bitcoin’s creator that saw the limitless potential behind decentralization, and Nakamoto didn’t just set out to explain how we can regain control over our money – he offered a new way for strangers to safely collaborate with one another. As momentum builds behind the technology, sectors across the board are identifying the abundant potential behind blockchain. So everyone (including myself) is asking: What is blockchain?

In layman’s terms, a blockchain is a database – a decentralized one which can be safely shared by multiple organizations, without any individual party retaining full control. According to Don & Alex Tapscott, authors of Blockchain Revolution, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually anything of value.”

Blockchain creates a platform for verifying and authenticating digital transactions that can’t be deleted. The technology relies on cryptography as part of a decentralized platform instead of a central authority which makes the platform unique to the operations of the economy today.

Blockchain has a few remarkable properties:

  1. Once the data is stored in the database, it can never be modified or erased. Every record on a blockchain is permanent for eternity.
  2. No single individual or organization maintains the database; several thousand individuals do, and everyone has a copy of the database themselves.

Authorito Capital is a blockchain company that labels themselves as “A crypto hedge fund – built by engineers, managed by software.” Their CEO, Mohit Mamoria, plainly describes the cryptocurrency blockchain in this way:

“Imagine there are ten individuals in a network. Everyone is sitting with an empty folder and a blank page in front of them. Whenever anyone does something important in the network, like transferring money, he or she announces it to everyone in the network.

Everyone makes a note of each announcement on their page until their pages are full. When they’re full, everyone has to seal the contents of their page by solving a mathematical puzzle. Solving a mathematical puzzle verifies that everyone’s page has the same contents and ensures they can never be modified. Whoever seals their page first, gets rewarded with some amount of cryptocurrency.

Once the page is sealed, it is added to the folder. A new page is brought out and the process continues forever.

As time passes, these pages (blocks) that contain important records (transactions) are added to the folder (chain), thus forming the database (blockchain).”


Transparent & Incorruptible

The blockchain network lives in a state of consensus and acts as a kind of self-auditing ecosystem. Each transaction within this network is referred to as a “block.” Two important properties result from the nature of this structure:

  1. Transparency – data is embedded within the network as a whole, by definition it is public
  2. It cannot be corrupted  alerting any unit of information on the blockchain would require A huge amount of computing power to override the entire network

Thus a trust and efficiency engine like blockchain technology has the potential to drive radical change in many industries – including insurance – while improving transparency and outcomes across the value chain.

Here are a few blockchain utilizations across the general business landscape:

Blockchain in Insurance

Hyperbole is commonplace when describing the impact that blockchain technology will have in the business world. Many believe that every industry will experience some sort of upheaval as blockchain becomes the foundation of the new business environment. The strategic question for business leaders lies in understanding how much is hype and how much is a reality. While many industries are trying to uncover the future role that blockchain will play, insurance executives have also been trying to discover the real story behind the technology.

A new SMA Research Brief asked insurance executives for their views on blockchain to determine the level of awareness in the industry and their expectations about business use and value. What this report uncovered was that it has become increasingly clear that education and understanding are growing steadily across the industry, but that activity is still limited as many insurance players are still in a wait-and-see stage.

Many actors within this space see blockchain as an important enabler for microinsurance, peer-to-peer insurance, asset tracking and authentication, smart contracts, and the exchange of sensitive information and documents. P&C Commercial lines insurers see the most potential, given the more dynamic nature of their products and their network of partners.

Digital trust is now an ever sensible reality; meaning that transactions between parties can be proven both linearly and cryptographically. Simultaneously reducing opposition while enhancing trust can help drive down the unnecessary burden of friction, regulatory pressure, and agency issues, for which blockchain is well-equipped to help the industry modernize. Within the insurance space, blockchain technology has the potential to further simplify the claims process, alleviate high premiums, help insurers create niche coverage and, most importantly, benefit those who live in catastrophe regions.

Here is a compilation of opportunities within insurance that can be brought forth through the use of blockchain technology, as presented by Blocksure:


There is a great deal of opportunity for the insurance industry to flourish through an intelligent adoption of blockchain technology, with applications in billing, fraud solutions, and smart contracts. Large insurers that currently navigate a complex ecosystem of products and relationships have the potential to benefit immensely. However, implementation of blockchain technologies will mean that insurance companies will have to face substantial change in their stale operating models.

Blockchain has the potential to facilitate cheaper, more consumer-oriented products to be developed. An ideal scenario would involve complete cooperation between blockchain startups, carriers, brokers, and reinsurers.

Many entities are placing their bets that blockchain will become foundational to the business world and pervasive in insurance, but this adoption is likely to evolve gradually over the next decade. Ultimately, the technology will ideally become invisible, just a natural part of the digital infrastructure that runs our world, much as the key emerging technologies of a prior age. Once-greatly-hyped technologies such as HTTP and TCP/IP are rarely discussed in business circles today – they are just forever acting behind the scenes as pervasive enablers of the internet and digital world. A similar trajectory is likely to await blockchain.

So what’s the bottom line? Yes, blockchain is vitally important, and it is a technology with the potential to transform the way in which the world conducts business. However, as its usage evolves and expands across insurance and other industries over the next few decades, it will become less hyped and more of a standard building block. At which point we will no longer talk at length about the technology as we do now. And before long, blockchain will slowly disappear into the background of our digital world.


About Cooper Cohen, CPCU

Cooper is an International Underwriter at CNA Financial in Chicago, Illinois providing tailored solutions to meet the foreign insurance needs of US-based clients doing business abroad. He graduated with honors from the University of Notre Dame where he studied the complexities of Finance & Entrepreneurship. He is a native of Colorado and joined the insurance industry in 2016. Cooper holds the following designations: Chartered Property Casualty Underwriter (CPCU), Commercial Lines Coverage Specialist (CLCS), and Construction Risk and Insurance Specialist (CRIS).

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