What in the world is blockchain?

Blockchain, cryptocurrency, bitcoin: These terms can often be highly confusing to those not in some area of the IT industry. Ray Wiley, CEO and co-founder of Hot Head Burritos and Rapid Fired Pizza helped bring some clarity to these topics during a 15-minute session entitled "What in the World is Blockchain and Why Does It Matter to My Restaurant," at the Restaurant Franchising & Innovation Summit, this week in Louisville, Kentucky.

What is blockchain?

Wiley said that blockchain is similar in nature to a simple checkbook ledger. However, rather than relying on a single person, blockchain relies on a network of computers to verify transactions and record them. It cannot be tampered with because all the computers in the network share the blockchain.

"The beauty of blockchain is you get non-disputable transactions," Wiley said.

With this technology, all the users on the network control the data, not one centralized bank. Users can also easily create additional currency through a process called mining, where they use their computer's power to solve mathematical problems to create new currency. For lending this power, they can also earn additional cryptocurrency.

What's it for?

The first use of blockchain was the cryptocurrency, bitcoin, and cryptocurrency can still play a big role in restaurants. Wiley said that his restaurant pays nearly $30,000 in fees for Visa transactions. By switching to cryptocurrency transactions, he said the brand could potentially pay just $5,000 or $10,000 in fees.

"Cryptocurrency is here to stay," Wiley said.

Blockchain isn't just for cryptocurrency, it can also power contracts. Wiley said that Ethereum allows businesses to craft their own smart contracts. This can be a boon for farmers in Third World countries which may have ineffectual or corrupt governments. But, if farmers obtain a smart contract on the blockchain, they have digital evidence they own their land.

Despite these possibilities, Wiley also said that blockchain technology is still largely in its infancy and many industries are uncertain about it.

Why the uncertainty?

Wiley said that his restaurant recently purchased some cryptocurrency mining equipment, but their bank was not too pleased with the activity. When the bank saw the name of their account, which mentioned mining, it shut down the account.

Wiley said that many banks are uncertain how to handle cryptocurrency and blockchain, though they are also simultaneously investing in it. Chase Bank and others are investing in blockchain solutions for a variety of uses.

Keep an eye on it

Wiley said that every restaurant should "keep an eye" on cryptocurrency and blockchain. He said that though the industry has a long way to go, it also has the potential to transform processes and reduce fees.

"Cryptocurrency is not something we should ignore," Wiley said.