So, if you came across this blog post in search of some useful Blockchain information, you’ve come to the correct place!
“Blockchain,” The name has created quite a stir among techies. Many tech enthusiasts have been piqued by currencies like Bitcoin, which employ the underlying Blockchain technology.
So, what exactly is a blockchain?
What is the significance of the term “decentralisation”?
What is the application scenario?
What effect does it have on the financial sector?
Will blockchain technology be able to last?
So, today, I’ll answer all of your questions!
Let’s go back in time!
It was founded in the early 1990s, after all!.As we moved into the internet era, data security became one of the most pressing issues to be addressed. Unauthorized access, data modifications, and data theft raised concerns about the dependability of data shared on the internet.
This is what prompted W. Scott Stornetta and Stuart Haber, two physicist researchers, to come up with a method that would keep historical data safe and unaffected by temperature changes.
In their first research article, published in 1991, they described the usage of cryptographically safe chains of blocks that preserved the integrity of previous data.
It wasn’t until 2008 that Satoshi Nakamoto, an anonymous person, used this technology and published “Bitcoin: Peer-to-Peer Electronic Cash Framework,” a white paper. This paper clarified the most basic principles of the most widely utilised blockchain technology today, “Bitcoin.”
Since then, new blockchain technologies have emerged, such as Ethereum, which is not only a digital currency but can also be programmed to do computations.
In reality, the financial industry adopted blockchain technology enthusiastically in 2016.
Isn’t that thrilling enough?
It’s only the beginning, after all!
Blockchain and the Concept of Decentralization
Well, the concept of decentralisation evolved as the safest technique to keep the data safeguarded in Blockchain.Let’s try to grasp centralization and the factors that lead to a gradual change toward decentralisation before delving into decentralisation.Let’s use Facebook as an example of a social media site.
Assume you’ve recently entered the realm of social media and created a Facebook account. You will be required to input information such as your name, date of birth, gender, interests, educational qualifications, and professional experience when checking in.
Once you’ve entered the wild world of social media, you’ll begin posting images, sharing places you’ve seen, dishes you’ve eaten, people you’ve met, and a variety of other updates that come to mind.
While you may think of Facebook as a platform that provides services and you as a consumer, this is not the case. The product in this case is you, as well as the information you’re providing.
Your data could be monetized and even utilised in ways that you are unaware of!
Have you ever wondered where all of this information is stored?
It’s on Facebook’s main cloud server, after all!
Because there is a single data repository, it is significantly more subject to attacks and data theft!
In reality, it is the most significant disadvantage of a centralised system.
What is the role of decentralisation in resolving this problem?
Decentralization seeks to remedy the aforementioned flaw!.Decentralization is defined as the transfer of power and authority from a central authority to the members of the community.
A blockchain is a decentralised, shared ledger that records and validates transactions or operations between two parties in a permanent manner. Examining cryptographic functions and timestamps is how this is accomplished.It enables you to verify transactions across a network of machines known as nodes.
Blockchain is decentralised and transparent as a result of this. So, if ten nodes fail in a 100-node blockchain, the system will continue to function because there are 90 other active nodes.
BitTorrent is a peer-to-peer file sharing platform that operates without the use of a central server. Bitcoin is comparable in that it does not require the use of a central authority, such as a bank, for two people to exchange values.This is what makes Blockchain technology so much safer and less vulnerable to attacks!
While many individuals have conflated the terms Bitcoin and Blockchain, this is not the case. Blockchain has a wide range of applications. It is divorced from the Bitcoin protocol and can be used for a variety of different cryptocurrencies. Its application, on the other hand, is not limited to digital currencies.
We can employ blockchain technology in a variety of businesses and for a variety of purposes. Monitoring ownership records, triple-entry accounting and management, creative rights management, patient records, and so on are some examples.
Let’s take a look at one of its numerous uses in triple entry accounting.Even if you didn’t want to get a Ph.D. in accounting, you’d know that double-entry accounting is how the world works!
For example, if I paid you $100, I would deduct the amount from my books and credit it to yours. If you need to verify these transactions, though, you’ll need to hire an auditor and pay millions of dollars for the audit.
With blockchain technology, there will now be a third ledger entry, also known as a notarized entry, in triple-entry accounting. It’s like a contract proving that I did actually give you $100. It merely eliminates the necessity for a central authority to oversee these transactions.This next-generation technology automates the auditing process and can help you save money in the long run.
Let me tell you, blockchain technology has the potential to revolutionise a number of other fields!
What Impact Can Blockchain Have on Businesses?
Well, the Blockchain has the potential to change a variety of company processes.Businesses, as you may be aware, rely significantly on massive centralised databases to store and handle vast volumes of data in today’s world. The data can benefit human resources, marketing, finance, distribution, operations, and other organisational areas.
On the other side, centralised databases have a lot of problems because they’re typically compartmentalised, unreliable, and inconsistent. This makes correct data sharing difficult both inside and externally.
In addition to slowing transaction times, centralised databases fail to provide a single verified source of truth on data for many parties to agree on. Furthermore, because there is a single point of failure, they are never secure. Yahoo’s recent hack is proof of this.
Businesses have understood that a centralised organisation is not the way to go. They’re now looking into blockchain technology to help them overcome the problems they’re having with centralised databases.
Because blockchain is based on distributed ledger technology, it can undoubtedly solve this issue. Instead of keeping data in a single database, Blockchain allows users to store, replicate, and exchange data over a network of databases.
This network is open and verifiable, allowing users to see a single source of truth for both current and past data. It also boosts transaction efficiency, accuracy, and speed while lowering conflicts and the need for middlemen.
several new use cases are merging across numerous industries enabled by Blockchain –
Supply Chain Management
Asset history becomes verifiable, traceable, and auditable, assuring accountability across the supply chain’s lifespan, and
Patients have easy access to their medical records at the medical facility.
Because musicians will now be compensated directly for their work, blockchain technology will help music ownership and distribution. As a result, middlemen are no longer needed.
The Internet Of Things (IoT)
Blockchain can be used to link and audit IoT machine-to-machine transactions.
As you can see, there are numerous advantages to embracing blockchain technology.
On the other hand, blockchain isn’t the answer to every business challenge. You should strive to answer a few questions before seriously considering Blockchain as a business application in the future.
- Do different parties or groups exchange information?
- Is it necessary for central agents to act as middlemen in some sectors of the business?
- Is there a distinction between a transaction and a business process in terms of confidence?
- Is there any property that requires historical data to be tracked?
- Is there anything in your business that you could automate and convert to smart contracts?
Consider payments in the financial services industry as an example. Assume you’re using your credit card to make a purchase. Now, from the moment you swipe it until you finish your purchase, you’ll notice that various middlemen and measures are involved. All of these factors contribute to high transaction costs, inefficiencies, and processing time delays.
This is why it can take three or more days for a transaction to go from pending to completed.Because blockchain technology eliminates numerous intermediaries, a financial services company can substantially improve transaction times by adopting it as a payment rail. Even transaction and operating costs can be reduced.
The Future of Blockchain
Blockchain, on the other hand, is here to stay!.And, believe me when I say that the technology will benefit more than simply financial services. Companies in practically every industry would benefit greatly from incorporating Blockchain into their operations.
- It will aid in the improvement of data archiving on disjointed networks.
- Ownership of personal data and digital assets
- The auditing of a system’s functioning in real time,
- A multi-step paper-based technique is automated.
- Assets should be tokenized for use on public blockchains.
- Other modern technologies, such as artificial intelligence and the Internet of Things, can be included as well.
At the moment, Blockchain is a technology with a surprisingly broad range of applications. While Blockchain has made a significant contribution to the expanding bitcoin ecosystem, it now has a variety of additional uses.Perhaps even more intriguing is the fact that new Blockchain applications are currently appearing at a rapid pace.
We may argue that Blockchain isn’t just taking a leisurely stroll; it’s destroying barriers and paving the way to the future!