Why is Blockchain So Popular?
Last updated
Last updated
Blockchain is a method of recording information that makes it impossible or difficult for the system to be changed, hacked or manipulated. A blockchain uses distributed ledger technology (DLT) that duplicates and distributes transactions across the network of computers participating in the blockchain.
Blockchain technology is essentially a structure that stores transactional records, also known as the 'block', of the public in several databases, known as the 'chain', in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’
The owner's digital signature authorizes every transaction in this ledger, which authenticates the transaction and safeguards it from tampering, making it highly secure.
Basically, the digital ledger is like a Google spreadsheet shared among numerous computers in a network, in which, the transactional records are stored based on actual purchases. The fascinating angle is that anybody can see the data, but they can’t corrupt it.
Several industries like Unilever, Walmart, Visa, etc. use blockchain technology and have gained benefits in transparency, security and traceability. Considering the benefits blockchain offers, it could potentially revolutionize and redefine many sectors.
Enhanced security
Your data is sensitive and crucial, and blockchain can significantly change how your critical information is viewed. By creating a record that can’t be altered and is encrypted end-to-end, blockchain helps prevent fraud and unauthorized activity. Privacy issues can also be addressed on blockchain by anonymizing personal data and using permissions to prevent access. Information is stored across a network of computers rather than a single server, making it difficult for hackers to view data.
Greater transparency
Without blockchain, each organization has to keep a separate database. Because blockchain uses a distributed ledger, transactions and data are recorded identically in multiple locations. All network participants see the same information at the same time, providing full transparency. All transactions are immutably recorded at the exact time in which they occurred. This enables members to view the entire history of a transaction and virtually eliminates any opportunity for fraud.
Instant traceability
Blockchain creates an audit trail that documents the provenance of an asset at every step on its journey. In industries where consumers are concerned about environmental or human rights issues surrounding a product — or an industry troubled by counterfeiting and fraud — blockchain helps provide the proof. With blockchain, it is possible to share data about provenance directly with customers. Traceability data can also expose weaknesses in any supply chain — where goods might sit on a loading dock awaiting transit.
Increased efficiency and speed
Traditional paper-heavy processes are time-consuming, prone to human error and often require third-party mediation. By streamlining these processes with blockchain, transactions can be completed faster and more efficiently. Documentation can be stored on the blockchain along with transaction details, eliminating the need to exchange paper. There’s no need to reconcile multiple ledgers, so clearing and settlement can be much faster.
Automation
Transactions can even be automated with 'smart contracts', which increase your efficiency and speed up the process even further. Once pre-specified conditions are met, the next step in transaction or process is automatically triggered. Smart contracts reduce the friction in human processes as well as reliance on third parties to verify that terms of a contract have been met. In insurance, for example, once a customer has provided all necessary documentation to file a claim, the claim can automatically be settled and paid.
Here's a list of key benefits you can expect to enjoy when adopting into your business:
Here are the top five prominent industries that will be in the near future:
Cryptocurrencies (like , bitcoin) remove the requirement for a third party to perform transactions.
Every single piece of data stored on the blockchain network is verified and encrypted using a .
Despite the costs of mining bitcoin, users continue to drive up their electricity bills to validate transactions on the blockchain. That’s because when add a block to the Bitcoin blockchain, they are rewarded with enough bitcoin to make their time and energy worthwhile. When it comes to blockchains that do not use cryptocurrency, however, miners will need to be paid or otherwise incentivized to validate transactions.
The other issue is that each block can only hold so much data. The has been, and continues to be, one of the most pressing issues for the scalability of blockchains.
While confidentiality on the blockchain network protects users from hacks and preserves privacy, it also allows for illegal trading and activity on the blockchain network. The most cited example of blockchain being used for illicit transactions is probably the , an online dark web illegal-drug and money laundering marketplace operating from February 2011 until October 2013, when it was shut down by the FBI.
The allows users to buy and sell illegal goods without being tracked by using the and make illegal purchases in Bitcoin or other cryptocurrencies. Current U.S. regulations require financial service providers to obtain information about their customers when they open an account, verify the identity of each customer and confirm that customers do not appear on any list of known or suspected terrorist organizations.
While Bitcoin had been used early on for such purposes, its transparent nature and maturity as a financial asset has actually seen illegal activity migrate to other cryptocurrencies such as Monero and Dash. Today, illegal activity accounts for only a very small fraction of all .
