4 Ways Blockchain Technology Will Change The Way You Do Business
What is blockchain technology?
Blockchain technology is one of the hottest trends of recent years in the tech industry. It offers an innovative way to record and store entries in databases and it is changing the business landscape. Most businesses record financial and other transactions in a digital ledger, the details of which are stored in a single, centralized system. Think of the banking industry — records of all transactions carried out by banks are normally stored in a centralized computer that belongs to a bureaucratic organization such as a central bank.
Blockchain databases turn this process on its head — instead of storing entries on a single system, a blockchain database distributes values across a continually expanding network of computers. This negates the need for a centralized system for data records.
Once a record has been added to a blockchain database, it cannot be altered, deleted, or manipulated in any other way. An entry is verifiable if it appears on the ledger, which looks essentially like a spreadsheet file. No details of the transactions appear on the ledger — the only information available is the fact that the transaction happened, and the ‘hash’ of the transaction, which is a unique digitally encrypted signature.
How Is It Useful?
As with any new technology, especially one of such complex nature, you might be wondering how blockchain databases could be useful. Here are four such potential benefits to businesses of implementing the technology:
- Watertight security. Any information stored on conventional centralized databases is vulnerable to malicious attacks by hackers — they only need to gain access to the system that stores the data. With blockchain databases, the records are distributed across hundreds and even thousands of computers. Any potential hacker would need to access every computer storing the database to manipulate it — this is practically impossible.
- Lower incidence of fraud and error. The complex mathematical algorithms involved in giving each ledger transaction its own unique ‘hash’ key means that fraud and error are a lot less likely to occur in businesses using the technology. This is because any modification of the underlying transaction would produce a different digital signature to the original and the network would quickly erase the erroneous entry.
- Significantly lower transaction costs. A world reliant on blockchain technology would be one in which the transaction costs of businesses tend towards zero. This is because there would be no central entity needed to store sensitive information on registered databases — every business in a specified blockchain network would have a copy of the ledger. This could mean billions of dollars saved in settlement costs.
- More trading. Banks and other intermediaries slow down the free flow of trade because of transaction processing time, often to comply with regulatory requirements. Blockchain databases reduce processing time drastically. This gives it enormous potential for an explosion in the volume of trading worldwide.
Blockchain technology is still growing — there is no doubt that as more businesses become aware of its potential benefits, it will become more prevalent in society. The blockchain could be as revolutionary as iPhones or even email in the tech industry.