What Is Blockchain?
One thing for sure the term blockchain keeps on getting more and more popular. Lots of people are using it, like any buzzword, out of context. Are you new to this word? Well, honestly you aren’t alone, and it isn’t a simple world, but I will try to make it simpler in this article.
In the book “Blockchain Revolution”, authors Don and Alex Tapscott define the blockchain as “…an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – By the way, an excellent book on the topic.
Blockchain technology is considered as a platform that transfers any digital information, without being copied, from one point to another. It helps in reducing the risks involved and it offers you maximum protection for your business.
Moreover, to have a more efficient and more powerful Blockchain system, there must be one distributed ledger that can offer a valid and secure achievement of consensus. Ledgers are very important to reduce the cost of operational risks. Its use can monetize Internet of Things in a programmable economy.
The good thing about the Blockchain is that it includes cryptography that can store and transmit data in a specific form, allowing it to reach its specific audience without being tampered with. In return, it can be transferred in a simple and safe way.
How Blockchain Works
Blockchain technology was initially invented to support the Bitcoin cryptocurrency. The invention of Satoshi Nakamoto, who by the way might be a group of crypto scientists or one crypto scientist. The blockchain is a ledger of records that are organized in data batches known as blocks. Furthermore, it is an independent, permanent, decentralized, and a transparent database that exists in multiple locations, shared by a community.
Blockchain offers decentralized and shared control. Because the network is decentralized, it becomes a public utility just like the internet and electricity. The good thing about the Blockchain technology is that it can connect two networks at the same time. And it can also handle assets.
Another important thing in Blockchain is that it has great immutability and audit trail. Once you write data on it you can expect to have a high level of security for your important data. And it can be useful in financial audits.
Among the features of the Blockchain technology is that it can be applied in various traditional exchanges such as stocks (NASDAQ), cryptocurrency exchanges such as Bitstamp, energy (RWE/ EEX/ GridSingularity), as well as currency like Bitcoin to name a few. In addition to that, it also comes with multi-sided platforms for exchanges like social media, ride-sharing, and online retail marketplaces.
Blockchain Technology Features
· Authorized users: With this technology, you can have the control of all the transactions and information.
· Reliability, longevity, and durability: With Blockchain, you don’t worry about malicious attacks because it has no central point of failure.
· Simplified ecosystem: Since the transactions are added to a specific public ledger, it reduces the complications and other issues that you may encounter due to multiple ledgers. As a result, you can have a more organized and clean database that you can use for your future success.
· Quick transactions: With the help and support of the Blockchain technology, interbank transactions can now be processed in a fast, as well as, easier manner. Blockchain can save you time, as well as, effort when it comes to your transactions.
· Reduce the cost of transactions: Blockchain technology can be one of your best tools to lower the transaction costs.
On the other hand, despite its benefits, you must also be aware of the challenges that you may encounter with Blockchain technology. The following are some of these challenges.
· Control, privacy, and security: When it comes to the security solutions, you need to take into consideration the cybersecurity concerns before you entrust your personal data on a Blockchain solution.
· Huge energy consumption: It is a fact that the Bitcoin Blockchain network is estimated to reach almost 450 thousand trillion solutions per second. Definitely, it will consume a large amount of energy due to computer processing power.
· Nascent technology: Solving challenges like the speed of the transaction, data limits, as well as, the verification process can be difficult when you make wide Blockchain applications.
· Complicated regulatory status: So far countries, governments, and central banks have adopted different, but cautious positions towards Blockchain. Some said they will adopt it as a technology and are going to implement it. However, when it comes to the topic of cryptocurrency most have avoided commenting or issued warnings.
· Cost: Blockchain will allow you to provide a high level of savings when it comes to the costs of the transactions. It may also save your time and effort on the transactions. However, when it comes to high initial capital costs, it can be limited.
· Cultural adoption: Blockchain can represent a complete shift for a decentralized network which highly requires the buy-in of its operators as well as its users.
Through the implementation of the Blockchain technology, business enthusiasts can now further improve their business transactions. As a result, their business will be more efficient and reliable, thus increasing their profitability.
In addition, it can also save more time, effort and hard earned money when it comes to the needs of your particular business or field. It offers you with a high level of support when it comes to the data management that you need in order to transform your business goals and missions into reality in a reliable, easy, and more automated manner.
With the help of Blockchain technology, you can further improve the monitoring and at the same time the effectiveness of the analysis process. After it is verified by the bank, the data now can be cryptographically stored on the Blockchain system.
To sum it up, the Blockchain technology is extremely beneficial to all of us, governments and banks included, some technologists are calling it web 3.0, and some countries are fighting it while other countries are embracing it. One thing is clear, it is going to change things faster than we realize and we aren’t going to be able to stop it.