Blockchain technology is well known and much in demand in the financial industry. But what exactly is it? And is it a good investment or should you stay away? Read on to find out more about this technology and what you can do with it.
In a nutshell, a blockchain is a form of distributed ledger that’s a decentralized database where any two parties involved can access it independently of one another. This means, you can’t hack the system, it’s secure and has an open auditable process. These are great advantages, and they’ve attracted many corporations to utilize this technology as a way to provide for their own business needs. However, like any new technology, there’s also lots of hype and fear-mongering that surrounds it.
Since many people are trying to envision how a currency or the economic system might work if it was off-chain, a Blockchain system could potentially be used. Basically, an off-chain system would allow any participant to make transactions without needing to trust the network at large. In an off-chain system, anyone can transact business without the benefit of an audit and with no need for a third party’s approval. Off-chain systems have become more popular and are becoming increasingly prevalent in the corporate world, but it’s important to understand that this isn’t always the best option.
This technology isn’t a currency or a banking system in its most literal sense. It is merely a shared database that enables an exchange of digital information about any transaction that occurs on a particular network. The Blockchain is a little more complicated than that, but basically a great deal of data is stored on a distributed ledger, and this makes it an effective tool to facilitate transactions that can’t happen offline.
Unfortunately, this technology doesn’t provide for massive amounts of trust. While the entire system does rely on the data being encrypted, this doesn’t prevent many from making false claims about the reliability of the system.
The most inherent disadvantages of the Blockchain are that there is no trust between the network of computers that verify and keep track of transactions. They all have different information about the same transaction, which means that the integrity of the system is very vulnerable. While no one has figured out a solution yet to overcome this issue, it doesn’t mean that the technology will never be a viable system.
Additionally, no one can guarantee that the system is safe from misuse, and so the system is vulnerable to malicious hacking and fake data. For instance, criminals could use fake data to make it appear that a person or company has made multiple purchases on the platform, when in fact only one payment has been made.
There are also some very side benefits to the Blockchain. One of these is the ability to record and cross-reference any transaction anywhere in the world. With such wide-ranging capabilities, anyone could potentially benefit from this sort of technology.
Some benefits include eliminating land title disputes and monitoring fraud cases, which could greatly impact the way that governments and other organizations handle their property management issues. The Blockchain also has a number of unique attributes that could help reduce fraud and prevent identity theft.
A second benefit includes the market potential for using this type of technology to lower transaction costs and increase efficiency. This makes the market potential incredibly large, and even if fraud is present, the system provides an anti-counterfeiting measure that other technologies simply can’t provide. The amount of money that can be saved by using this technology is tremendous, and could mean an enormous boost to your bottom line.
If you’re in the position to determine whether the Blockchain will be beneficial to your business, don’t hesitate to investigate it further. It’s unlikely that the technology will be a panacea for all of your business operations, but if you were considering using a more traditional approach, then you may want to take a hard look at your current procedures and see if they’re ready for the Blockchain.
With this particular technology, there’s no reason for anything to go wrong. It will allow any two parties involved to transact business with complete confidence and that comes with that type of certainty.