The word “blockchain” gets thrown around more and more lately as this type of technology creeps its way into a variety of businesses from digital currencies to signing e-contracts. However, many people don’t understand exactly what blockchain technology is and how it can help their business. After the Bitcoin cryptocurrency phenomenon that was blasted across news networks for weeks, many people began wondering, what is blockchain technology?
What is blockchain?
The term “blockchain technology” refers to a decentralized, often public, digital ledger. These are the two main components of the tech—it uses a decentralized network and creates a highly secure ledger. Essentially, this ledger has a record of every transaction that has taken place in the blockchain, but the ledger isn’t controlled by the government and can be accessed across multiple computer systems. It’s nearly impossible to get information from the ledger unless you are a part of the blockchain, making it a very secure platform for payment.
Blockchain relies on cryptography and hashing techniques to create a secure, immutable “chain of blocks” that records all the transactions related to a business network. Cryptography refers to the way that a program is coded, and in terms of blockchain, cryptography allows users to complete a transaction without requiring authorization elsewhere in the chain. Once the transaction is processed securely and verified, it becomes a permanent part of the ledger, linking that chain together.
There is a reason large corporations, like FedEx and Walmart, have jumped on the blockchain bandwagon. According to TECHJURY, 90 percent of European and North American banks were exploring blockchain in 2018. Businesses across the globe are interested in reaping the benefits of this systemized process and are looking forward to the future of blockchain technology.
What problems can blockchain solve?
All industries require tracking of assets—some more highly regulated than others. Keeping track of assets can be a complex and challenging process. It involves multiple entities that do not always share data freely. Therefore, each entity within the network maintains its own records, which can be subject to cyber-attacks. And, consolidating information across entities requires time and third-party validation, opening the network up to errors and disputes.
Blockchain technology provides transparency into business processes, while maintaining the privacy and security that is critical when involving multiple entities. One of the greatest advantages of blockchain is that it can improve trust inside and outside your organization, ensure all data is secure, and guarantee that every transaction is linked with the appropriate entity. All entities involved are authenticated and authorized to perform actions or see the data. The solution is both private and difficult to breach.
Features and benefits of blockchain:
- Provides a single source of trust by establishing a shared ledger where all participants can update and verify data
- Creates a decentralized network, meaning there is no central authority handling all information
- Every modification to the ledger is a consensus of all the parties involved
- Saves time due to a near real-time synchronization of the ledger
- Saves money by reducing or entirely eliminating the need of third-party entities who solely are used for validating transactions and resolving disputes.
Integrating Blockchain into Your Business
Blockchain technology offers some obvious and attractive benefits such as increased security, reduced costs, and transparency, but it can be integrated into your business in more ways than you think. As a digital payment method, it’s clearly already found success, but you can use this same technology to securely sign contracts, reduce transaction times, pay employees, and communicate with your supply chain. As the benefits of blockchain technology are further explored and more businesses integrate this tech into their business model, capabilities are sure to increase as blockchain technology develops
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