There is a new kid on the block and it goes by the name of Block Chain Technology. This new kid has taken the world by storm yet normal people like us are still unclear and puzzled at best, and scratching our heads figuring out its meaning and significance in our lives.
To put an end to the confusion surrounding this subject, we have tried to explain this path-breaking technology in simple, plain English for you all.
Who’s behind this technology?
This intelligent invention is the brainchild of a person or group of people known by the alias, ‘Satoshi Nakamoto’. On Jan 3, 2009, the genesis block was mined and was still in experimental stages. The technology was limited to cryptographic community and was successful in becoming the backbone of Bitcoin.
Enabling digital information to be shared but not mimicked, blockchain technology is now the backbone of a new type of internet.
Bitcoin is also called the “digital gold ” and today the total value of this cryptocurrency is close to $9 billion US.
What’s the meaning?
Authors Don & Alex Tapscott of the book Blockchain Revolution (2016) explained the technology in following words-
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Basically, it is an anonymous digital ledger which employs a data structure to simplify the way we perform transactions. Think of it as a huge global spreadsheet on which can anyone can perform the entry.
You must be wondering what’s in a Block? The Bitcoin miners use robust, functional software to obtain transaction data and build blocks to attach to the blockchain. These so-called ‘miners’ form part of the consensus system operated to keep an account of all the transactions, and they make a Bitcoin as a reward for each block calculated. Blocks are comprised of four parts:
- Reference to the previous block
- Summary of entered transaction
- Evidence of work for creating the block
For instance, A wants to send money to B. A block is created after every component of a transaction is completed. The block is broadcast to every party in the network and those in the network approve the transaction is valid. The block can be added to the chain, which provides an indelible and transparent record of transactions. Thus, money successfully moves from A to B.
Blockchain is Fraud-Proof
Thus, blockchain presents following benefits:
- It permits users to manage this ledger in a safe way without the interference of any third party.
- It is a constantly updated list of transactions
- It is supported by a peer-to-peer (P2P) network that is either public or private
- Every member of the community network uses the same “consensus mechanism” to verify every transaction made through the network.
- The blockchain is anonymous, protecting the identities of the users. This makes blockchain a more secure way to carry out transactions.
- It creates a unique, permanent audit trail.
- There is no single point of failure and no way to make modifications to the transaction record.
- The algorithm used in blockchain reduces the dependence on people to verify the transactions.
- It is the technology behind Bitcoin, Ethereum, and other cryptocurrencies.
What’s the Impact of Blockchain?
Let’s have a closer look at how this innovative technology has influenced different sectors of the industry and in future how it is going to shape our human lives.
Financial Service Industry
First and foremost, the Blockchain technology has given a 360-degree change to the ways people do financial transactions.
- It has reduced the costs of overall transactions and IT infrastructure
- Provided irrevocable and tamper resistant transactions
- Has decreased systematic risks and eliminated credit and liquidity risks
- Consensus in a variety of transactions
- Ability to store and define ownership of any tangible or intangible asset
- Increased accuracy of trade data and reduced settlement risk
- Near-instantaneous clearing and settlement
- Improved security and efficiency of transactions
- Enabled effective monitoring and auditing by participants, supervisors and regulators
Shipment & Logistics
In a classic shipment and logistic industry scenario, communication is often undertaken through emails, memos, forms, document, signed declarations, barcodes, etc but with the integration of blockchain-based system in the industry, there is an unprecedented efficiency, speed, and scale. The Port of Antwerp has recently combined blockchain operation to streamline its container logistics.
Apart from streamlining patient’s blockchain information across various private and public healthcare facilities, there are various startups in the USA which are using blockchain technologies to trace the movement of medicines within states and countries. The extensive application blockchain has in abating the hazards of fake drugs is among the most exciting domains of its industrial use.
Application of blockchain can shed light on the entire process from manufacture to retail. Irrespective of where the product goes and how many times it is repurchased, we would be able to track the journey of any product to its roots. From a cow on a farm to the steak at your table. From fabric manufacturer to the jacket in your closet. No more troubles with identifying whether a product is.
Investment Management Industry
Due to endless legislation and regulations in the investment industry, the speed, security and transparency of blockchain technology has endless applications here. It can bring down operations management and transactions cost of the industry by more than $22 billion yearly, as published in a 2015 Santander Report.
What’s the Future of Blockchain?
Apart from so many the benefits, the experts at Harvard Review predict it can take several years before the technology actually seeps into each and every fibre of political and economic infrastructure of the society. There was a similar scenario when almost two decades back, the Internet was born, it was a disruptive, game-changing force behind various industries – blockchain technology holds the same potential. Apart from being a revolutionary force in the financial sector, the technology is going to make most enterprises, institutions and governments rethink, redesign and discard various conventional processes and bring more transparency in the working of various organisations.
The best is yet to happen. Fingers crossed.