You may have heard of blockchain in relationship to cryptocurrency, Bitcoin in particular, but there is so much more to it than that. Blockchain is already having a significant impact upon the world we live in. In the future, blockchain’s influence will be huge. From secure communications to banking, blockchain is changing the way we do business and the way we live our lives. But how does it really work and what is all the fuss about?
Blockchain in a Nutshell
The foundation of a blockchain system is decentralization. This means that no specific person or company owns a blockchain. Blockchain technology is comprised of information stored across a network of multiple computers. The information is secured by cryptography such that it may be distributed freely, anyone can access the system and assist in running it, but no one can delete it or corrupt it. Blockchain gets its name because it is comprised of a continually expanding ledger of transactions stored in blocks, that are permanently recorded and linked in a chain in chronological order.
Blockchain was launched in 2008 as part of a proposal for the virtual currency system known as bitcoin. Bitcoin was the initial application of blockchain.
The system allows for bilateral financial transactions, which are openly shared and distributed. Blockchain reduces the cost of transactions and has the potential to become the preferred recording system of all transactions.
Why is Blockchain Important for Business?
Here are just a few ways in which blockchain can improve your business:
- Security: These days, hackers are becoming an increasing problem in all areas of business. Blockchain tightens security and is resistant to hackers.
- Transparency: Because the ledger is shared with all participants, they can all see ongoing transactions, so there is no chance of discrepancy.
- Cost: Although traditional financial transaction models are costly, blockchain solutions are inexpensive.
- Preventing payment scams: Blockchain technology eliminates online scams. This is because both buyers and sellers can use smart contracts when buying and selling products or services.
- Immediate transactions: There is no faster solution for financial transactions than blockchain technology.
How Blockchain is Changing the World
Blockchain is already influencing many sectors of the world we live in today.
These influences include:
- Banking and finance: Blockchains allow financial transactions to take place faster, more securely, and more efficiently. Many banks and financial institutions are looking to blockchain to enhance their transactions.Communications: Blockchains enable reliable automated digital communications such as call notifications, emails, and system alerts. This is beginning to effect communications through and among large industrial organizations as well as private communications.
- Cybersecurity: All data contained in blockchains is encrypted with advanced cryptography. This means that it prohibits unauthorized changes and is resistant to hacks. Utilizing a blockchain system will make cloud data storage much safer from attacks.
- Internet of things: This category already includes buildings, cars, home appliances, security cameras, lighting and heating, and the range of applications is growing rapidly. Currently, however, these devices operate from a central communication hub, which means that hackers can gain access to your personal internet of things. For example, they could take over your car, or your home security system. Blockchain has the potential to prevent this by decentralizing all the data.
- Charitable donations: Millions of people donate to worthy causes every year, but how can you be sure that your money is going directly to where it is needed? Blockchain systems can help by creating trust through bitcoin-based charities and online reputation systems.
- Healthcare: Although patient portals are moving toward the centralization of patient information, this type of system is very vulnerable to hackers. With the implementation of blockchain, medical facilities and healthcare organizations could store medical records, only sharing them with authorized medical professionals.
- Government: Blockchain could improve government services in many ways. The main two are by reducing bureaucracy and increasing security. For example, blockchain could be used to make unemployment and welfare benefits more easily verifiable. Similarly, voting could be made more secure if blockchain was used to verify each vote’s legitimacy and also to count votes in a more secure, tamper-proof, automatic manner.
- Ride-sharing and rentals: Although you may think that Lyft and Airbnb are decentralized networks, the people who own the platforms are the ones in control and they take a fee for the services they provide. Blockchain could be implemented to allow car and homeowners more control.
Bear in mind that blockchain is still in its infancy and experiments are still being made, some of which will be more successful than others, but this technology has the potential to impact just about all aspects of life, from energy management to retail, online music to logistics, and real estate to business consulting.