With cryptocurrency in the news and Blockchain technology finding innovative applications, the curiosity surrounding the technology is never-ending. Although Blockchain powers most cryptocurrencies, the technology’s business use has gained traction only in recent years. From governments to financial institutions and large enterprises, organizations and businesses are leveraging the secure and immutable nature of Blockchain to record critical data and trace the origin and genuineness of transactions.
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But at the outset, learn about Blockchain technology and its many advantages. Understand why more and more businesses are exploring Blockchain to address business challenges.
What is Blockchain Technology
Blockchain technology is an open-source distributed ledger that stores the data or records between two parties transparently and verifiably. It is managed by a peer-to-peer network that verifies each new block. Once the data or the block of data is validated and recorded, it cannot be altered without changing the subsequent blocks of data across the entire network, making it virtually impossible to alter data or commit fraud.
The network links the blocks like a chain, where each block contains data. The blocks are connected via cryptography, where each block in the chain is linked to the previous block with a cryptographic hashtag, and hence the name “Blockchain.”
Advantages of Blockchain Technology
Blockchain is an infrastructure that can store or transfer data on any computer anywhere in the world. It has the ability to integrate seamlessly with existing systems and processes. The advantages of Blockchain are many, making the technology viable for applications across industries.
Here are some key advantages of Blockchain technology:
1. Greater Transparency
As all the participants in a Blockchain network share the same documentation, it makes it impossible to change or amend the documentation without changing the next documentation blocks. This makes the technology accurate, consistent and transparent.
The shared and immutable ledger can be accessed only by members and with permission.
Besides, as every transaction on a network such as a cryptocurrency is published publicly as Blockchain, it is open for scrutiny.
2. Enhanced Security
Blockchain systems are more secure than traditional record-keeping and even IT systems. Transactions are agreed upon by the participants in the network and shared across a large global network of nodes or computers rather than a single server. The use of cryptography further secures the data, thus averting any potential cyber-attacks or breaches.
Immutability means information contained in the blocks is irreversible. Any data or transactions, once recorded on the Blockchain, cannot be changed or deleted. They are time-stamped and date-stamped, and permanent records. Another advantage is that transactions can be tracked for a trustworthy audit trail. The best example is that of the digitization of land parcels, where Blockchain keeps track of land ownership even when it changes hands.
The end-to-end encryption anonymizes data, and the distributed shared ledger helps maintain the privacy of participants.
5. Reduced costs
In Blockchain technology, middlemen and third parties are done away with. There are also no charges. Blockchain use thus creates efficiencies by streamlining transactions and cutting costs.
Documentation is distributed to every participant in the network, thus minimizing the time for recording and sharing transactions. The ability to handle transactions in less than seconds renders the technology more efficient than traditional methods of record-keeping. A high processing speed makes Blockchain stand out from other technologies. Although transaction speed depends upon the network traffic and size of the blocks, it is nevertheless the fastest technology today.
7. Digital Traceability
Blockchain can trace the origin of transactions and confirm their legitimacy. This makes it an ideal technology for financial applications.
The many advantages of Blockchain have inspired blockchain practitioners and consultants to innovate. Today we find Blockchain applications in diverse domains such as human resource management and anti-money laundering.
The decentralized nature of Blockchain technology means it cannot be controlled at a single source or node. Being open-source, it is also not affiliated with or controlled by the government.
10. Data Ownership
As Blockchain is spread across a wide network of participants, the control of data does not rest with a single participant. No government or third party can control the process or distribution. So individuals own their data and have the power to decide how much to share and with whom. This is facilitated by Smart Contracts.
11. Fraud Prevention
Data is stored at many nodes/computers in the network instead of a single place, making it difficult for fraud to take place without the consent of others in the wide network. As data cannot be changed once recorded in a block, the technology makes a good case for fraud prevention.
12. Global Nature
As the Blockchain infrastructure of computers is located globally, cryptocurrencies, payments, and other cross-border transactions are quick and cheap.
Many industries benefit from the advantages offered by Blockchain technology. The banking and financial industry, the supply chain industry, healthcare and pharma, and government departments are leveraging the advantages of a highly secure, immutable, and speedy method of recording transactions. In the days to come, we can expect a higher adoption of Blockchain technology. And IT professionals who want to pursue a steep career growth in cutting-edge technology must explore Blockchain.