At the heart of the excitement surrounding cryptocurrency is blockchain technology. Blockchain technology is the foundation that all virtual currencies are built upon. It is the decentralized and digital ledger technology that records all of the transactions without needed a financial intermediary, like a bank. Blockchain technology appears to offer four distinct advantages over existing payment facilitation networks.
One of the main reasons why blockchain is so intriguing is that the technology is always open source. This means that other users and developers have the opportunity to change it as they see fit. Being open source makes altering logged data within the chain, complicated, making blockchain technology particularly secure.
Reduced transaction costs
Blockchain allows peer-to-peer and business-to-business transactions to be completed without having to work with a third-party. Without the involvement of a middleman, like a bank, tied to the transactions in a blockchain, the costs to the user or business can be significantly reduced over time.
Faster transaction settlements
When dealing with traditional banks, it isn’t uncommon for a transaction to take days to become settled completely. This is because of the protocols established in bank transferring software, as well as the fact that most financial institutions are only open during the day. Blockchain technology, on the other hand, works 24 hours a day, seven days a week, which means transactions made with the blockchain technology can be processed more quickly.
Another reason why blockchain technology is so exciting is its lack of a central data hub. Rather than having to run a massive data center and verifying the transactions through the center, blockchain technology allows individual transactions to have their own proof of validity, as well as the authorization to enforce the constraints. Since information on a particular blockchain is piecemealed on individual servers throughout the world, it ensures that if hackers stole the data, they would only gain a small amount of data and not the entire network, keeping it from becoming completely compromised.
Even with these advantages, there is still a significant worry that can’t be overlooked. Throughout history, investors have continued to overestimate how quickly a new technology will be adopted. Like most new technologies it will take time to lay the groundwork for blockchain, and it could still be some years before businesses fully embrace this technology as a significant component of their payment systems.
Benefits of blockchain that go beyond cryptocurrency
While the current buzz over Bitcoin and other cryptocurrencies are hard to ignore, the underlying technology that makes the trade of bitcoins possible needs to be further explored. Blockchain technology is the virtual, public ledger that records everything in a secure and transparent matter. The benefits of blockchain are more than big enough to sustain its relevance for years to come, unlike the cryptocurrency it was designed to support. Here are six of the most important benefits of blockchain that will prove useful to businesses in different industries.
Supply chain management
Blockchain technology offers the supply chain management industry the benefits of cost-effectiveness and traceability. A blockchain can be used to track all the movements of goods, their origin, and their quality. This can help to simplify processes within the industry like ownership transfer, payments, and production process assurances.
A blockchain system can lead to finding the point of origin if an irregularity is detected somewhere along the supply chain. This will make it easier for businesses who utilize the technology to carry out investigations and execute the actions necessary to correct the problem.
Recording transactions through blockchain can virtually eliminate human error and will prevent the data from being tampered with. Records within the blockchain are verified every single time they are passed on from one block to the next within the chain. Along with providing guaranteed accuracy of documents, the process also leaves a highly traceable audit trail.
The aspect of voting, just like with supply chain management, all boils down to trust. Utilizing blockchain technology in local elections could significantly diminish electoral fraud, which has become an issue despite the prevalence of electronic voting systems. Another example would be how NASDAQ could leverage blockchain to facilitate shareholder voting.
The idea of implementing blockchain technology for securities and commodities training isn’t new. Given the open-yet-reliable nature of the blockchain technology, it isn’t surprising that stock exchanges consider it to be the next big step forward in trading.
In certain parts of the world, household and commercial establishments can now take advantage of blockchain-enabled transactive grids for sustainable energy solutions that track usage accurately. Blockchains can also be used to improve the tracking of clean energy. Renewable energy is traditionally followed through tradable certificates that have been issued by the government. The documents are terrible in serving their purpose, which is something that blockchain wouldn’t have any trouble handling.
It is clear that blockchain technology is making strides in different industries outside of cryptocurrency. While most people are ready for decentralized ledgers, the progress of blockchain technology means it probably won’t be too far off from becoming mainstream.