The Importance of Blockchain

Blockchain has been described as one of the most disruptive technologies since the invention of electricity; however, the industry remains confused about what exactly this technology entails. The buzz around blockchain keeps spreading and its impact on businesses will continue to grow. In this article we will explore the actual potentials that blockchain have, despite recent crypto downfall.

Blockchain is a decentralized digital ledger that stores information using cryptography. This ledger serves as a distributed database and records all transactions that take place within the network. It uses consensus algorithms to verify and validate each transaction.

Unlike traditional databases which are centralized and prone to hacking attacks, blockchain technology provides a tamper-proof public record of all transactions. In addition, it eliminates the need for middlemen or third parties because it operates by itself without any intermediaries.

The blockchain network consists of computers called nodes, which run the application code and maintain the integrity of the system. When a new transaction occurs, the node verifies the integrity of the previous transaction by comparing it with other nodes' records. Depending on the consensus algorithm, the agreement to validate transactions differs from one blockchain to another.

This process is repeated until the entire network reaches a consensus and validates the transaction. The verification of transactions takes time, but once validated, it becomes permanent.

In the past, when making a purchase, you had to trust the seller because the buyer and seller were not connected through a direct line of communication. Nowadays, if someone wants to sell something online, they have to trust the website’s servers and payment processors, which could result in trust issues.

When you make a transaction through a website, it requires several steps such as creating an account, verifying your identity, providing bank details, entering credit card information, and paying for the item. These processes involve multiple parties, which makes it difficult and risky for the seller to get paid.

With blockchain, buyers and sellers don't have to go through these complicated procedures. Instead, they can directly interact with one another and complete their transaction instantly through hard-coded rules in smart contracts. Since nodes are the ones maintaining the network, you don’t need to trust a central authority to trust the records.

This is why blockchain matters, it eliminates the need to trust.

There are several benefits of using a blockchain network instead of a central server, such as improved transparency, efficiency, and security. As mentioned earlier, blockchain technology is tamper-proof, meaning that no one can modify or delete the ledger. Therefore, it is impossible for people to cheat or steal from others as long as they don’t control over half of the hash rate.

Another benefit of adopting blockchain is reduced cost and increased efficiency. For instance, companies can eliminate third-party services that take part in the transaction process. They can also save lots of time and resources because the transactions are processed faster.

Furthermore, blockchain reduces fraud and improves the credibility of the organization. With blockchain, there is no need for third parties to check the validity of the transaction. All transactions are recorded automatically and publicly available.

Lastly, blockchain helps in improving the quality of products and services because the authenticity of the source is verified.

Here are some other key advantages of using blockchain:

Eliminate Fraud: Blockchain removes the need for third-party intermediaries during transactions, which means that fraud is nearly impossible.

Reduce Compliance Costs: By eliminating the need for external validation, blockchain saves companies millions of dollars in compliance costs.

Speed Up Data Transfer Processing: Because blockchain has built-in smart contracts, it speeds up the data transfer across different networks.

Improve Transparency: Thanks to blockchain's transparency, organizations can better monitor and track their operations.

Increase Product Quality: Through blockchain, consumers can easily access the history of a product and see whether there is anything suspicious about it.

Reduce Business Risks: Because blockchain is decentralized, it protects your business from cyberattacks. It also prevents fraud from taking place.

There are numerous industries that are expected to undergo massive changes thanks to blockchain technology. Some examples include banking, healthcare, supply chains, legal systems, and governments.

Here are a few ways in which blockchain can disrupt the world of finance:

Loan applications: There are certain financial institutions and lenders in the US that allow applicants to apply for loans online and receive approval instantly. Blockchain technology can replace these conventional lenders with decentralized apps (DApps) that will improve customer experience and streamline the loan approval process.

Credit Cards: According to a report published by CreditCards.com, more than 80% of Americans would like to buy a car or start a small business with a credit card, but only 10% actually do so. However, blockchain-based credit cards can solve both problems. Credit card providers can build a platform where customers can receive instant approval for loans while giving them a chance to earn rewards points.

Insurance: Many insurance companies offer discounts for drivers with good driving records. However, they also charge high premiums for those who drive recklessly. Blockchain can solve this issue by allowing drivers to prove their claims and prevent fraudulent claims.

Real Estate: Real estate markets are slow and inefficient because realtors and brokers work together to negotiate deals and sell properties. Blockchain technology can help remove the middleman and connect renters and landlords directly, reducing the number of sales agents involved in the transaction.

How about now? What are the kinds of industries that have been using blockchain? Well, companies and organizations are adopting blockchain in various areas. Here are some of the major ones:

Healthcare: Healthcare is a big market, and it's projected to increase over the next decade. Blockchain can help reduce costs by eliminating duplicated efforts and ensuring patient privacy.

Supply Chains: Supply chains are complex ecosystems made up of many participants. Each party needs to communicate and collaborate with others to ensure that the products reach their destination safely and securely. Blockchain can help streamline, automate, and accelerate these processes.

Government: Governments have become increasingly reliant on automation. Blockchain can help government agencies manage their finances and processes more efficiently.

Many industries are embracing blockchain technology to streamline business operations. Although technology comes with a lot of challenges, it has great potential to change our daily lives and help us achieve our goals. Despite recent crypto fallout, the technology is solid, and it’s not going anywhere but up.

Interested to learn about blockchain? We have the right article for you.