Blockchain is a distributed ledger technology, a continuously increasing and expanding chain of records or blocks that are linked and secured via cryptography thereby creating a networked audit trail of transactions, or actions that have been taken.
It is a way to make transactions and transfers online without the use of an intermediary. Instead of trusting a third party to keep the transaction history safe and accurate, blockchain lets you seal “pages” of transactions with a key code for security.
Blockchain technology was conceived a little over ten years ago. In that short time, it went from being the foundation for a relatively unknown alternative currency to being the “next big thing” in computing, with industries from banking to insurance to defence to government investing billions of dollars in blockchain research and development.
Not only this, while blockchain has gained significant popularity due to its role in cryptocurrency like Bitcoin, Ethereum, etc., industries as diverse as real estate, healthcare, insurance, systems of records may be disrupted by blockchain.
This interest in blockchain technology fundamentally stems from the fact that
In blockchain, multiple copies of the data are stored at many points throughout the network of participants, with participants each having a full copy of the entire ledger. As a result, the system more resilient to attack and disruption as against traditional databases which are stored on a single server, which acts as a single point of failure. Additionally, if the server gets overloaded, users can’t query it for data in a timely manner.
Every transaction on a blockchain is associated with an identity. This enables transparent audit trails, the ability to require specific types of content based on the user, and transaction authorization based on permissions.
The entire history of the blockchain is stored on multiple nodes and is easily viewable by an auditor, thus creating a highly transparent system.
The cryptographic underpinnings of blockchain technology make the system resistant to tampering with historical data. No single participant can affect the data, and advances are regularly being made to ensure that the data cannot be changed once logged.
However, though Blockchain shows tremendous potential, is still barely out of its infancy. Initial experiments with creating businesses built using blockchain technology have been mixed, with many failures resulting in millions of dollars. The biggest problem with current blockchain implementations is that it requires an enormous number of users acting as miners to function. Mining requires computers to run many millions of calculations per second, thereby consuming a significant amount of electricity, which costs money. Large businesses will not want their machines running at full speed simply because the blockchain software needs numbers to run. This otherwise-purposeless electricity expense is a significant hindrance so far to adoption.
A second impediment to the adoption of blockchain in a well-established industry, as with any new technology, is simply the inertia of existing solutions. Any blockchain-based solution for any sector would require major infrastructure changes and wide-scale user adoption. Particularly in the case of blockchain, where a technology went from non-existent to worldwide buzzword in two years, more conservative companies will need to see a number of successful use cases before even thinking about adopting this new technology.
Despite this, many businesses recognize the potential of blockchain and are working hard to make the transition easy.
In a market saturated with new and innovative business strategies, it can be difficult to decide which to adopt. On one side you don’t want to fall behind when it comes to the latest technology. On the other, you don’t want to waste your money on a “cutting-edge” fluke. If you’re looking for a new, efficient way to carry out transactions, blockchain is a technology that your company might find helpful. Far from a short-term trend, blockchain is a revolutionary approach to transactions that major companies are beginning to embrace.