Nailing the Blockchain Technology

 What is Blockchain technology? How does it work?

 

Blockchain technology became very popular with the popularity of cryptocurrency. Since Cryptocurrency is a digital form of money with no legal authority, the security of the investments made in crypto was carried out through blockchain technology. This concept of Cryptocurrency has revolutionized the financial market so is the acceptance of blockchain technology. It is expanding its reach beyond the banking sector to a wide arena of transactions ranging from supply chain management to insurance, real estate, etc. Even government agencies are using it to collect taxes, records management, and cyber security.

 

Blockchain is the top trending and revolutionary technology that is set to change the future of computing. To understand better how it works and its uses, it can be compared to Google Docs. Of course, blockchain is more complicated, but the analogy remains the same.

 

Defining the concept of Blockchain

Blockchain in simple terms is a shared Distributed Ledger for recording Transactions (DLT). It is used to record and track transactions. Unlike traditional ledgers, blockchain works on a decentralized network that gives everyone access to the base document. It is transparent and visible to every user. This concept itself is giving it the highest security one could aspire for. No one is left invisible, and any modifications done are visible to all in real time, making it more transparent. This is the same concept google docs is using however unlike google docs, blockchain would not allow changing the original content or data once included. It gives more security.

 

Components of Blockchain

A blockchain has two components. A) block and B) chain. While the blocks are the collection of data, the chain is the virtual link connecting these different blocks chronologically. Each block will have a timestamp, indicating the date and time of data recorded. It makes it impossible to add or delete any block in between.

 

How does blockchain work?

 

•  Stage 1 creates a block of data

On each transaction, a block of data is created, and its movement is recorded. Those transactions can either be tangible or intangible. The data is stored in such a way that it can answer many questions like who, what, when, where, how, etc. If it’s related to any food or beverages where the temperature is important, you can even add it as well.

 

• Stage 2 Connecting with other blocks

Just like moving an asset from one place to another, the block created is moved with a chain of data corresponding to it. It will contain the exact time and sequence of the transactions that prevent alteration.

 

• Stage 3 chaining the blocks

The next step is to make the chain strong making it irreversible. It means it’s impossible to tamper with the blocks that are fixed. It makes the whole transaction not tampered with that both end parties can rely on.

 

How safe is blockchain?

Unlike the traditional way of bookkeeping, there is no single master copy concept in the blockchain. Every member popularly known by the name “node” will have equal access to it. There will not be any single point of failure or hacking. Even if a hacker tries to manipulate, he needs to break into the device of all nodes that are scattered around the globe. This transparency gives the highest security to a blockchain.  

 

Beyond being transparent, it is most secure as well. Blockchain security is 100% tamper-proof and that’s the reason it is used in cryptocurrency. It gives crypto the freedom to transact at any time and beyond the boundaries of a country. Blockchain provides an enhanced cryptographic security system that till today has no history of security breaches.  

 

Why is blockchain important?

Blockchain is a revolutionary and top-trending technology that helps reduce security risks, weed out fraudulent transactions and bring about transparency. It is most important in financial services. Within seconds, you can transfer the end amount of money outside the boundaries of a country. Below mentioned are the key characteristics that make blockchain the most trending technology in the world today.

 

• Immutability

The blockchain system is always immutable, a state of not changing or being unable to change. This characteristic enables the user sturdier platform to work in the highly competitive market. It ensures there is no hampering done in the packages that are in transit and alarming them of any changes throughout the transit.

 

• Transparency

The level of transparency users get here is beyond comparison. It helps the end to the end user to have mutual trust among themselves. Companies can do transactions with other companies or with the public without any pinch of mistrust.

 

• Digital freedom

Everyone wants physical as well as digital freedom. But that is not happening in the present day’s banking system. They give us connectivity but take away some of our freedom. A banker can block a transaction or even confiscate your investment without informing you. Since Blockchain works as a decentralized concept, there is no supervisor here to take control of your authority (just like a bank above). Here you are your bank or supervisor. You can handle your money as you like without any authority to monitor it.  

 

•  Improved efficiency

Blockchain removes intermediaries and unnecessary monitoring. It is secure and digital. All these four characteristics will increase the overall efficiency. Any transactions will take only a fraction of a second to complete especially when you want to transfer funds to a foreign country.  

 

•  Inexpensive

Compared to other technologies, blockchain is inexpensive. Removal of central authority and intermediaries helps to cut short many service charges, particularly the charges of middlemen. It also means less paperwork. You do not require highly skilled accountants to take care of your transactions. Most important is the speed of the transactions. It will cut short many miscellaneous costs that may arise between the date of despatch and the date of receipt.

 

Applications of blockchain technology

Blockchains are widely used in 

• Banking and Finance

• Other sectors including the government

 

Banking and Finance

 

• International payments

Blockchain allows easy and secure international transactions within a few seconds. It is helpful for multinational companies that have a business interest in multiple countries and the transfer of money is routine. Previously they had to wait for government approval and huge intermediary charges. Since blockchain has no central authority, the transfer is quick and free of charge.

 

• Capital Market

McKinsey reports that by using blockchain solutions, the capital market is bound to get the following benefits.

• Faster clearance and settlement

• Consolidated auditing

• Improved operational efficiency

It also helps to manage equity swap transactions that enable both parties to understand the changes in real-time.

 

• Trade finance

Cross-border trade was always a tedious thing to do as it had to pass through several stages of the painful process of monitoring and approvals. 

 

Because of these barriers, the transaction moves snail-like. Many complain by the time they were able to clear these barriers, the time gap is so wide enough to change the currency rate. They also require a high volume of documentation and expert professional service. By using Blockchain, one can very efficiently streamline trade barriers as it simplifies the transaction process. Through blockchain, various interruptions of changed geographic boundaries do not exist.

 

• Less compliance with auditing

Because of high security and minimal chances of manipulation, it is easy for accounting and auditing. It also eliminates the possibility of human error making the business house spend less on auditing.

 

Blockchain in other sectors

 

• Supply chain management

Blockchain helps to take real-time tracking of goods and services. It is very easy for a trader to line up the different stages of the transaction and chain them to track easily. It becomes the best solution for a logistics company to track logistic movements. 

 

• Healthcare

The Healthcare sector uses lakhs of highly sensitive data daily. This data has immunity to the data protection act. None of the data, particularly the medical history of a patient should reach the hands of a third party. The law envisages strict adherence to data protection of medical records and blockchain help hospitals to block the third-party gaining access to their database.

 

Hospitals need to build multi-layer checking systems to safeguard their data. Blockchain comes as the best alternative to secure data. By storing the data in the blockchain, the data becomes highly secure, transacting only among the authorities and can identify any attempt to breach the security system.

 

• Media

Media houses are already using blockchain technology to eliminate fraud, increase the validity of the news, reduce costs, and protect intellectual property rights. They use this technology to share content with their viewers without taking the help of any content delivery networks.  

 

Using blockchain, they can easily release news, music, movies, etc so that their audience who are scattered across the globe can view it instantly.

 

Uses of blockchain to government agencies

 

• Record management

All government agencies, whether local or central use numerous personal data on a daily basis and the security of it is very important. For this reason, government agencies are relying on blockchain technology. Whether it’s the data in the ledger of the registry of death, birth, marital status, or property transfers, they will be safe. It also avoids the heinous task of citizens going physically to their local government offices to record or make changes in data.

 

• Identity management

By using this technology, local bodies can omit many routine personal checks to understand they are dealing with the right person. Otherwise, it will be more frustrating, time-consuming, and sometimes hectic.  

 

• Cyber security

Cyber security becomes more fool proof by using this technology. It is easy to address the existing challenges faced by cyber security, especially in the areas such as IoT devices, networks, and data transmission/Storage. 

It helps the authority prevent hackers from attacking the devices. 

 

• Big data

The immutable characteristics of blockchain and the available checklists become very handy for big data transfer.  Checks from every computer connected make it an excellent tool for storing and sharing big data.  

 

Conclusion

Blockchain technology is undoubtedly going to bring a revolution to society. Initially, there was a growing fear of how society will adapt itself to the sudden leap into changed technologies whether blockchain or artificial intelligence. The biggest example was cryptocurrency which does not have an issuing authority itself. 

 

But the current trends show that society is adapting well to the changing technology and is only going to improve. With the growth of BaaS, only time will tell the quantum of changes blockchain is going to install in our daily life.