Blockchain technology and it’s potential/possible
applications in the business have garnered plenty of attention in recent years. However, many don’t understand the basic concept of what it is and how it
works.
This article will walk you through the basics of blockchain technology,
discuss how it differs from other digital ledgers, and highlight some potential
benefits of using it in your organization.
What is Blockchain
technology?
A blockchain or distributed ledger/log is a
decentralized database that keeps a continuously growing list of data records.
Each node participating in a blockchain has a copy of it, so if one node
updates any record (for example, to add payment), all other nodes must update
their copies to reflect that change.
No individual entity controls any data
stored on the blockchain—it’s updated only as part of an agreed-upon process by
all participants.
It means there is no single point of failure and no way for
anyone to tamper with existing data.
How blockchain will
change our lives
Blockchain has a
lot of potential as a record-keeping technology. Today, it’s used primarily to
track cryptocurrency transactions, but there are many possibilities for
applications outside of digital currencies.
As enterprises look for ways to cut
costs and streamline operations, many have begun exploring blockchain to
achieve these goals.
Gartner estimates that blockchain will generate an annual
business value of $176 billion by 2025.
Real-world
applications for blockchain technology
The easiest way to understand blockchain technology
is to look at how it can be applied to real-world assets.
For example/instance,
if you were looking to buy a house, you would most likely work with an escrow
agent to verify that your funds were available before processing your
transaction.
A blockchain could execute such a function without an intermediary
in place.
Instead of going through a third party, you could send money directly
to another person or business from your account. It makes transactions more
secure and saves time.
Is blockchain safe?
Blockchains are inherently safe. They’re built to
be shared, distributed ledgers that require consensus across a network of nodes
(computers) to change.
While it’s theoretically possible for someone to hack
into a blockchain network, it would take enormous amounts of computing power
and time to be completely impractical.
For example, if someone wanted to hack
Ethereum, they’d have to alter every transaction made on its blockchain since
2015.
The future of
blockchain technology
There are several blockchain platforms in existence
today. A basic understanding of blockchain technology could help you make sense
of which to choose or if a particular platform might be suitable for your
business needs.
For a start, you must be aware of the workings of blockchains
and the limitations they have. With any online investment, it’s essential to do
your research first to make an informed decision.
How does blockchain
technology work?
Transaction data is collected in blocks. Each block
represents a set of transactions encoded with a timestamp and other
information.
Blocks are linked to form a chain by using cryptography—that’s
where blockchain gets its name.
By design, blockchain is resistant to
modification of data. Once recorded, information can only be added to a
blockchain ledger but never erased or removed.
It makes it ideal for recording
events (such as digital currency transactions) that must be verified as
legitimate by all parties involved.
What are some
examples/instances of companies using blockchain technology today?
The list of blockchain companies keeps growing.
Many startups apply blockchain in different industries, so there are plenty of
examples to learn from.
For example, Blocktivity provides real-time
visualization of activity on various blockchains.
Blocktivity breaks down
blockchain activity into mining pools, decentralized exchanges, number of
transactions per day, top assets transacted on each chain (e.g., bitcoin or
ether), etc.
How will blockchain
benefit businesses across industries?
By creating a decentralized way to record
transactions, blockchain promises to free up companies from many of their
business operations.
Once blockchain systems are in place, we won’t need banks
as middlemen for everyday transactions (like wire transfers or domestic
payments).
Instead, financial institutions will become simple enablers that
allow money to move securely between endpoints in the business network.
It will
make it easier to transact across borders, create new markets with lower
barriers to entry, and enable smaller businesses to compete with larger ones by
lowering transaction costs.
The technology also has implications for how
businesses manage assets like intellectual property, inventory, and supply
chains.
For example:
It could track products through each production stage:
- from
raw materials through delivery
- to ensure quality control and prevent
counterfeiting.
Overall should we
use Blockchain technology?
Blockchain is a new method of storing information
that has come about due to its use in cryptocurrency.
However, blockchain can
be used for many things, including keeping track of certain transactions.
Overall, it’s important to remember that blockchain can be used for many things
beyond just cryptocurrency.
People often compare blockchain technology to
Microsoft Word or Google Drive because it’s an idea you build upon more than
once to create something even better.
