Blockchain powers the entire realm of digital assets but beyond that use, this technology will be the foundation for the internet’s next evolution and will change the entire paradigm of how business is conducted.
What Is A Blockchain?
A BC consists of blocks of data and information that are connected to other blocks of data forming a chain. It is a means of recording and storing data that is decentralized and is recorded on a ledger that is obtainable to everyone (open source) but unalterable once recorded.
It is a new technology that has the potential to develop a decentralized system where you can robotize various data center functions which can be utilized by many different industry sectors.
There are various types of Blockchains
- Public: it is a domain where anyone can participate and join. It is open for everyone to view.
- Private: single industries or companies can manage private blockchains and only have authority over the network. The data is simplified but not open to everyone to view.
- Federated: has the features of public and private blockchains. Some data is private, while some data is public. It is more efficient than a public chain and fits well in governmental entities that require a high-speed platform.
- Hybrid: offers control over what data is public and what is private. Only certain factors are kept private. This is a highly regulated and scalable platform. It also offers privacy when still connected to a public platform. Very adaptable to fit the needs of the company using it.
Is A Blockchain Private or Public?
Blockchain is a technology NOT a single network. Some blockchains give access to the public, ie. the Bitcoin chain, while others are private – being accessed only by a group of ‘certified’ users.
Corporations, banks, and governments are beginning to realize the value of using Blockchain technology. It removes the need to trust any entity other than the code powering it, and a smart contract that runs on it. The smart contract is executed automatically based on specific conditions and triggers, and there is little either of the parties can do about it once it has been uploaded on the blockchain. For example, a smart contract monitors a payment arrangement between a consultant and their client. It will monitor how much work time the consultant is using. It will then automatically charge the client based on the terms and conditions coded into the contract.
Benefits Of Blockchain
The benefits of doing business in a trustless way have not been lost on companies around the globe. The Blockchain Model is being used by a wide array of industries and is championed by the use of smart contracts. And while it is being used principally by large organizations, blockchains offer promise for medium and small businesses alike. With smart contracts, businesses can obtain more certainty in day-to-day operations.
Using the prior example of a consultant and client, this could be as easy as integrating a smart contract with whatever platform it is using for e-meetings. The contract will keep track of the number of presentations and brainstorming sessions taking place and once it hits a milestone agreed upon in advance, the consultancy will automatically receive payment. The idea is that once you supply the smart contract with the tools to track interactions with a counterparty, it can ensure both sides follow the rules to the letter.
What The Blockchain Will Improve or Prevent
- Better technology permits fewer face-to-face interactions
- Decreases the problems of cyberbullying, online stalking, and crime.
- There is no privacy in the digital world as we know it; bank accounts, social media, and personal details can be hacked
- There are a lot of intermediaries involved in our work resulting in work delays and more expense
- There is a dependence on current technologies. Putting airports, hospitals, railways, stock and commodities trading, and even our electrical grid in jeopardy of cyber-attack and failure.
- Current technology brings waste and floods us with useless messages, emails, sales advertising, etc.
Components of Blockchains
- Nodes: the computers that run the blockchain programs. There are two types of nodes: Full and Partial. A Full Node maintains the full length of the ledger. It can approve, deny, and certify transactions. A Partial Node maintains the ‘polished’ form of the ledger. They have low storage value and keep only the value transactions.
- Ledger: a collection of data that reflects the results of all the transactions. It shows the state of the Ledger at a particular time and date, and when and where the transactions were placed on the ledger.
- Wallet: a digital mechanism used to store cryptocurrencies. These currencies have global value and transactions are made without third-party intervention on a 24/7/365 basis.
- Consensus Network: the blockchain is a decentralized system, providing consistency and verification of the data based on the acceptance of the rules and agreements of all participants of that blockchain.
Many companies, large and small, are now evaluating blockchains for their safety in this changing time phase. Many still find it hard to understand how blockchains work and are confused about the financial impact of using blockchain technology.
You now know that blockchains use a ledger system where no one can change or delete the data. In addition, the blockchain uses a peer-to-peer network which makes it decentralized. It uses ‘keys’ for security whereby the user establishes two keys, a public, and a private key. These keys provide the user with a unique authentication. The public key is what other users will see. The private key is your system password. For example, your email address is your public key while your email access password is your private key.
How The Blockchain Works
A transaction is initiated through a node aligning with its private key. Essentially a private key will develop a digital signature that is unique and untraceable. If anyone tries to change the signature it will automatically be rejected.
The transaction will be transmitted to the nodes for verification. If the transaction is valid, it is placed on the ledger and generates a unique ID to secure it from further modification. When a new block is introduced to the system, it will be linked to the previous block. As the process continues, a chain of blocks is formed, hence: Blockchain.
Industries/Businesses Impacted By Blockchain Technology
The healthcare industry will be one of the most positively impacted sectors. It is estimated that the U.S. healthcare industry loses over $200 billion to fraudulent payments each year. The objective of the blockchain would be to remove third-party service payments.
Global cyber-security spending exceeded $1 trillion between 2017-21. Using blockchain drastically reduces the burden of data breaches and provides strong encoding. It also helps with data ownership and may even rule out the need for passwords.
Banking and Finance
The need for credit cards and bank money transfers will be eliminated. By using a peer-to-peer system the blockchain has no need for a bank to transfer money from you to anyone else or any party you are transacting with. The ledger records the transaction in a safe and unaltered way without any banking interference and delay, and transactions can be accomplished on a worldwide basis. For example, if I used Coinbase (a cryptocurrency exchange) and transferred crypto I can use a tablet, PC, or cellphone. There are no intermediaries, ie. banks, involved. The money would go from/to you to/from another party, basically instantaneously.
The Supply-chain involves sourcing, planning, production, inventory, warehousing, fulfillment, transportation, and delivery. Blockchains can track every process along the supply-‘route’ and, in addition, provide product details on each step of the supply journey.
Blockchains have already proven to be a valuable tool for a variety of companies and governmental entities. It will be utilized in many ways that are currently unforeseeable. It will change the way in which businesses conduct daily operations and in turn consumers’ interaction with them. It is the next step in the evolutionary progression of technology and mankind.