Questions like is blockchain important? Will blockchain change the world? are so recurrent that they deserve a simple explanation. Blockchain technology’s popularity started with the rise in Bitcoin (BTC) prices. While this technology is no more famous than the cryptocurrencies it supports, it can be very important beyond the financial system.
What is Blockchain and how does it work?
Blockchain is a decentralized network that works as a distributed ledger that stores and protects digital data and digital record. Being a ledger of decentralized nature where multiple parties can access it at the same time, one of the main advantages is that the recorded data is difficult to alter or modify.
This technology can help verify and track transactions from multiple parties involved in a deal that needs security and transparency.
Blockchain can provide secure transactions, reduce operational costs, and speed up data transfer processing. Blockchain can also help in contract management and supply chain auditing. Blockchain can be used in electronic voting platforms and securities and shares management.
Why is blockchain important?
The blockchain solution is of great importance to many industries and sectors. So here are some features that make this technology so important:
Blockchain is important because it is a transparent technology. There are different types of blockchain networks and protocols. Public blockchain provides transparency due to its nature. This type of blockchain is very useful for improving many aspects of our current society, including, conducting electronic elections. Businesses and organizations can also use this technology to improve the user experience and ensure that they can interact with different processes, such as transparency and full control or partial control.
One of the fundamental rights of human beings is freedom. There are central organizations that offer connectivity in terms of economics and finance, but they also take away the customer’s freedom. Take traditional banks for example. The bank can block your monetary transactions, financial transactions, or confiscate the funds in your account if they see fit. There are banks and financial services that do this – even when customers do nothing wrong. Therefore, blockchain eliminates central authorities.
Using blockchain technology, you will be in control of your true digital freedom. You keep your own records, so you are your own bank and have more financial privacy. You can send and withdraw your own money whenever you want and without anyone’s permission. Since you don’t need any central authority, you are the sole owner and responsible for asset management.
Blockchain technology is not just limited to the finance sector. This makes the technology excellent for the future of our society. Blockchain can be used in almost every sector and market, including commercial finance, banking, government, healthcare, education, and so on. These sectors are what make our society function.
Blockchain uses state-of-the-art encryption technology to add a layer of security to the records and data stored on the network. In addition to cryptography, the decentralization feature makes this technology support better security than other traditional systems or databases. The cryptography of the blockchain uses complex mathematical algorithms that when combined with the proof-of-work (PoW) mechanism can protect the data and systems on the blockchain network.
Blockchain technology is much cheaper when compared to other technologies and systems. Being a decentralized technology, there is no need to pay for intermediaries, which improves operational cost efficiency.
Using blockchain in the supply chain means less paperwork and documents. The documents and paperwork themselves cost a lot of money. There are other associated costs, including lawyers’ fees, fees and emoluments, and other costs with organizations.
Why is blockchain important for business?
Now that we understand the importance of blockchain from a general perspective, let’s now understand the business world.
The business sector is the one that can benefit the most from blockchain. Implementing blockchain for normal users is not an easy task. This technology needs to be managed by a specialized team, which makes it an ideal business for companies that have the budget to manage their own blockchain protocol.
Blockchain in business can reduce operational costs by removing once and for all intermediaries or business partners that may eventually be unnecessary, as it not only reduces costs and record keeping, but can also reduce the time for information exchanges – improving efficiency in communication.
While the financial sector can benefit the most from this emerging technology, other sectors that can also be truly transformed by blockchain’s potential include healthcare, insurance, transportation, real estate, retail, artificial intelligence, machine learning, and more.
Because it is a transparent and secure technology, banking, finance, and savings, may be the sectors that this technology will see widespread adoption. Digital financial services have the biggest advantage when it comes to smart contracts. The advantages come from digital assets and smart contracts. By using blockchain, banks can dramatically reduce the costs associated with bank accounts maintenance and financial transactions.
Already in more complex industries such as, capital markets, financial markets, stock markets, insurance companies , sales and trade finance, Payments and domestic and international remittances will also have some business benefits including:
Authenticity: With blockchain, financial institutions can bring data integrity and security while ensuring authenticity in their systems.
Simplified process: blockchain can improve operational efficiency in any major sector of our society, including the ability to make a settlement, reporting and auditing complete and transparent in real time.
Other blockchain capabilities: better data privacy, less infrastructure costs and transaction costs, compliance, security, and so on can be other potentials of this technology.
What is so special about blockchain?
Distributed public ledgers
A blockchain network or protocol is a distributed ledger that is used to store data and transaction records across many computers using cloud computing in a decentralized way.
A distributed ledger works like a distributed database in which users can access and participate in the network. For example, in the bitcoin network, users can access and verify bitcoin transactions, making it less subject to cyber attacks
To keep data secure, Blockchain uses the cryptographic algorithm (SHA256), so it eliminates unauthorized access. Each user on the blockchain network has two keys: private keys and public keys.
Proof of Work and Mining
Most blockchains protocols use the Proof of Work (PoW) mechanism. PoW is a mechanism that is used to validate transactions on a blockchain network. This mechanism keeps a blockchain network secure by solving complex mathematical puzzles called mining. Users connected to a blockchain network who attempt to solve the puzzles are called miners.
In mining, the miners who use their resources (time, computing power, electricity, etc.) to validate transactions and record it in the blockchain’s ledger, receive a reward in cryptocurrencies.
How will blockchain change the world?
Considering the benefits and advantages that blockchain offers over other systems, blockchain can revolutionize and redefine many companies, sectors and industries in the near future.
These are the 4 sectors where blockchain will have a promising future:
- Banking and finance
- Healthcare industry
- Supply Chain Management
Banking and finance
Banking and financial services have very expensive transfer fees, moreover, the process of transferring funds takes forever. Moreover, sending money abroad becomes an even more difficult task due to foreign exchange fees and other non-operating costs.
As Blockchain eliminates the need for a central authority and third parties, the banking system can provide instant payments with the highest security and borderless low fees throughout the digital world.
Being a decentralized ledger that records all the transactions and securely stores transaction records, bitcoin users have a lot of ease when making bitcoin transactions. A cryptocurrency user can simply open a cryptocurrency finance app and use a digital currency that helps to perform peer-to-peer (P2P) money transfers. With a blockchain platform, cryptocurrency users can send and receive digital money while saving on fees, all instantly and securely.
Centralized databases are subject to cyber attacks. By eliminating the centralized system, blockchain technology provides transparent and secure capabilities to record transactions and store data without compromising anyone’s personal information.
Blockchains protocols immediately identify a malicious attack due to the peer-to-peer connections, where data and information cannot be tampered with. Data stored on a blockchain network is verified and encrypted using a state-of-the-art cryptographic algorithm.
Instead of following the centralized system, a company can use blockchain technology to become a decentralized autonomous organization (DAO), in other words, an organization whose rules and guidelines are made through smart contracts.
One example of a company using blockchains protocols is Weplay Esports. WePlay Collectibles is a project of NFTs from Weplay Esports that aims to create a community and unite true eSports fans and talent, as well as artists and digital art enthusiasts.
WePlay Collectibles are for people who want to be part of eSports events and show that they like players and talent in a different way, beyond merchandising. Now, WePlay Collectibles has become part of a platform, where you can buy items with NFT technology – not only physical and digital eSports memorabilia items related to a specific tournament, but also works related to contemporary art.
Find more information about the platform and NFTs at https://weplaycollectibles.com
There are major problems in the current healthcare system, with blockchain patients can connect to other hospitals and collect their medical data or medical records immediately. In addition to the delay in the current healthcare system, there are high chances of data corruption and exposure of sensitive digital records since the information and records are stored in a physical memory system. Blockchain eliminates a central authority, which makes it easier to record and access data instantly.
Supply Chain Management
The commerce industry is strongly affected due to the lack of transparency in supply chain management. This industry has many challenges, such as lack of coordination between various departments and lack of reliability. Tracking products can be done using a blockchain protocol, making it easier to track the entire supply chains.
Being a decentralized distributed ledger, blockchain provides capabilities for verifying and auditing transactions of various partners involved in the supply chain management process.
Being an emerging technology, the blockchain maturity is a big concern. This technology is also experiencing big challenges, including scalability and widespread adoption.
But, blockchain technology is undoubtedly very important to our society. With the growth of blockchain-based applications or blockchain based system, it is the only time when most businesses and industries will start adopting blockchain.
In recent times, many things that were happening in our societies seemed impossible to turn out to be false. Things like, high transaction fees, network fraud, lost data recovery, money laundering, intellectual property theft, recording transactions, influence peddling and government investment targeting, etc. But, all these are now things of the past, and can be solved or avoided with the help of Blockchain Technology.