BlockChain – How it can help your business and personal dealings.
Blockchain: What it is and Why you need it for your business.
Recently, cryptocurrencies like Bitcoin and the newer currency Ethereum have grabbed business headlines due to the sky-high values they have reached. Their secret? Blockchain: a worldwide online database available to anyone with an internet connection. The main difference between this online database and others, is that no central figurehead owns it—it belongs to anyone who has access. Blockchain technology is a digital distributed ledger of economic transactions that is totally incorruptible, and it can be used to not only record financial transactions but also anything else of value to businesses.
Blockchain for business is a very hot topic these days and for many, a confusing one. In this article, we’ll cover what Blockchain is and how it can benefit different aspects of a business of any size and any industry.
What is Blockchain?
A Blockchain, at it’s core, is a distributed ledger of cyber events. “Distributed ledgers overcome the trust issue by allowing every party in a network…to verify the accuracy of the central ledger using their own copies” (Investopedia, “Distributed ledger”). A distributed ledger stores account numbers, business balances and transactions made by the customer or business. Whenever a private user or business interacts with their accounts and/or makes a transaction, the ledger updates its records. Each transaction is distributed to everyone with access to the ledger, verified by the previous transaction, then bundled together to form a block. After many transactions, a chain of these blocks is formed. Hence, Blockchain.
How is this different from my current ledger?
Currently or in the past, most companies have used what is called a centralized ledger. A centralized ledger, also known as a general ledger, contains all the accounts for recording transactions related to a company’s assets, liabilities, owners’ equity, revenue, and expenses. This ledger is the backbone of any accounting system which holds financial and non-financial data for an organization. It is also vulnerable to outside attack. Unlike a distributed ledger, a centralized ledger does not have multiple witnesses of each event, making it easier for hackers to infiltrate and change.
A distributed ledger, like Blockchain, uses, can be updated much faster and more efficiently, plus, they have more accountability than a centralized ledger. Rather than one person in control, the distributed ledger “distributes” a copy of each transaction to everyone with access and updates it immediately. Each employee/user is known as a node, and each node can legally store a copy of the data within the distributed ledger. The nodes are then able to verify and update any and all of the transactions made by the customer/business. The distributed ledger allows businesses to keep all records up to date and stays constantly in sync because it is accountable to so many witnesses.
Origins of Blockchain
So, where did this technology come from? Blockchain was originally used to verify and track purchases made with the crypto-currency Bitcoin. Using a public Blockchain instead of a centralized ledger, allowed each Bitcoin transaction to be collectively verified, offering the user a large degree of speed, security, and traceability of their transaction.
Here’s how it works: On a public Blockchain, there are multiple known versions of you, each one appearing as a node on a public network. These nodes act simultaneously as executors and miners of each transaction. The transactions are collected into blocks, then added to the Blockchain. The business’ miners were part of a reward program and received Bitcoin rewards based on how much time it took for the miner to work out the following:
A) Is the transaction a valid transaction?
B) What is the correct mathematical key that links to the transaction block in the correct place in the open ledger format?
C) What is the current value of each transaction?
Once the miner figured out the answers to these questions, they received their reward. The more transactions that were executed, the more Bitcoin rewards each miner received.
I don’t use Bitcoin. What else is Blockchain for?
Of course, Bitcoin is only one example of many uses for Blockchain technology. It can be applied to any multi-step transaction where the visibility of the transaction, the value, and the traceability are all required for business to proceed. Blockchain can be used to track supplies, sign contracts, manage deeds and titles, and stay accountable and organized while conducting business across time zones and countries around the world.
Innovations like Blockchain technology allow us to do better by being accountable in a larger forum. But technologies this innovative can also be disruptive. Blockchain technology is highly likely to change the way all business is handled globally within the next decade. An innovation with the potential to revolutionize business, Blockchain enables companies to become completely customer-centred, sharing data with customers, while updating and verifying records and transactions in real time. Even big global corporations can seriously reduce their efforts and costs because
Blockchain is easy to adapt and can improve entire organizational infrastructures by streamlining multiple processes. It offers companies the opportunity to work with complex consensus algorithms, resulting in many advantageous database capabilities via multi-criteria evaluation processes. Blockchain technologies for business create exponential growth, customer trust, and an unlimited future.
With the option to employ Blockchain technology on a public or private network, it can be used even in industries (like the financial sector) where transactions must remain private as well as secure. In fact, many financial institutions employ Blockchain technologies to demonstrate financial regulatory compliance, while staying secure and reducing costs.
Blockchain is the leading way for businesses to become much more efficient and effective. It is a technology that can be on a permissioned or an un-permissioned (public or private) network, allowing for infinite possibilities.
Is BlockChain Really Secure or is it hype?
Without a centralized authority in charge of the ledger, it is more difficult for hackers or a cyber-attack to infiltrate and change the data. If an employee of a business, or some outside hacker, was to start interrupting and changing database records in the ledger, all the other employees of the business (aka nodes in the blockchain) would quickly notice this precarious attempt and reject it because the records would not match those records of all the other nodes who have access to the database information. With the new distributed ledger of Blockchain technology, the data it contains can only be manipulated if every node within the business accepts the attempted changes that have been made. That prospect is highly unlikely.
Let’s take a look at Bitcoin again to see why. There are about 10,000 different nodes that are initially separated around the globe. Right now, they are all perfectly calculated and balanced. If a hacker wanted to disrupt the chain and “steal” some Bitcoin, they would have to access ALL nodes, changing each one across the world. But, all nodes update immediately and constantly, making it nearly impossible to manipulate without someone noticing. Because each transaction must pass validation from every associated node/employee, the hacking attempt would be quickly realized and dealt with, without any loss. This is Blockchain technology in its full glory.
Think of a Blockchain as a business’s wallet, and that wallet is the business’s distributed ledger account. Every Blockchain/node within the business must have a public key, but there will also be the individual holder of a private key. Only the true owner of the business account/ledger maintains full control of the private key. The private key holder has a digital signature that is truly unique and only accessible via the private key. But those holding the public key, (the nodes), by using the signature and their public key, can verify that any transaction is indeed a legitimate transaction, holds a certain amount of value and that all information in the database is in agreement.
Because of this public/private ability to collectively verify transactions, Blockchain is now considered one of the most exciting new options for business technologies. Blockchain technology changes the banking and day-to-day business game for the better.
Is Blockchain is for Everyone?
Blockchain technology is considered a General Purpose Technology that can affect the entire economy and the social structure. The Blockchain is a data storage system that logically structures all data used by a business. As previously mentioned, data is stored in blocks belonging to a large chain and each block in that chain can contain multiple transactions. The blocks contain the technical information about the previous blocks and the fingerprint associated with the collected and stored data.
Here are its advantages over other systems:
The core idea of Blockchain technology is to place trust in a peer to peer network, a network of nodes in a decentralized computing system. No one person controls it, making it more secure and more difficult for outsiders to attack.
With a distributed database system, each transaction is accountable to multiple nodes. This process allows the business to be constantly on alert for any inconsistencies, stopping and correcting them in real time. Once distributed, all data is considered true/trusted information because numerous nodes have agreed on the content.
Each transaction added to and shared on the Blockchain is basically impossible to modify or reverse by one of the nodes, or by an outside source such as a hacker/cybercriminal. Therefore, any unauthorized changes to the transaction/data collected will be noticed immediately by the other participating nodes. This seriously reduces the risk of any malicious tampering within the Blockchain.
Blockchain technologies allow online payments between two parties without any need for a trusted central authority to record the transaction. This method is a peer to peer network in which each transaction in the database MUST be announced publicly. Therefore, everyone concerned will be aware of the transaction and its value.
Smart Contracts and Blocks
Blockchain technology certainly is an innovative technology and provides many benefits to businesses. It is constantly evolving to fit business’s needs. Recently, it began to offer smart contracts. A smart contract is a computer program that is implemented on the Blockchain. The smart contract lets each node working on the network conduct transactions, make their own deals and even execute multiple conditions without the need for any such intermediaries of the business if they have been allowed access to the Blockchain. The smart contract offers adaptability, scalability and interoperability because many different protocols and consensus algorithms make it possible to solve any issue with any transaction. The speed of the smart contract is very efficient, and it offers a decentralized environment which is free from the control of any individual authority.
And yet the Block is at the heart of Blockchain technologies. This is where all the business’s transactions and their values are kept, and it is an extremely safe place to keep them. All new transactions and the value of each is continuously validated and added to by the business’s miners and executioners. The block structure consists of two main parts: Header and the List of Transactions. As previously explained, each block is accountable to both the previous block AND the following block, making an impossible to corrupt record of transactions.
BLOCKCHAIN TECHNOLOGY IS SET TO BECOME MAINSTREAM FOR BUSINESSES BY THE YEAR 2025
Technology is always evolving, don’t let your company get left behind! Blockchain is expected to experience growth at an astoundingly rapid rate during then next few years as businesses start to realize the beneficial features that this technology offers. It is set to be mainstream by the year 2025, and almost every industry will use Blockchain technology in their organizational infrastructure and computing systems.
The distributed ledger concept of technology will reduce business costs while raising profits. Blockchain allows companies from start-up businesses to global corporations to conduct safe and verified business transactions, and even sell shares directly on the stock market. It also allows businesses to use Nano payments, as well as bypass the current financial system.
Blockchain is considered the perfect fit for a company’s copyright protection concerning the products and/or services that they sell to their customer base. The distributed ledger model can help everyone—from CEO’s of corporations to inventors to manufactures to online entrepreneurs—secure full authorship, right of ownership, and the history of origin of their products and/or services. Blockchain has a lot of potential in the fields of production and energy consumption and can easily cut organizational infrastructure costs within businesses.
Blockchain offers a consensus through a decentralized network with permission to join features. It incorporates a proof of work platform, a proof of stake, and many cryptocurrency possibilities for your business. It can create a banking system with a supply chain, its nodes all working with and controlling transactions in real time. Blockchain’s distributed ledger concept offers businesses the opportunity to be fully aware of their organizational records, and in control of them on a database that is constantly verified and brought up to date.
To sum it up: Your business needs Blockchain.
The biggest benefit for businesses in any industry, whether it is an online or offline entity, is that Blockchain technologies can help to seriously reduce the company’s costs and exponentially raise annual profits. By implementing Blockchain into your organization, you provide your business the opportunity to move forward into the future with confidence, because Blockchain will make that future so much brighter.
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Peter Jonathan Wilcheck – November 2018 #Blockchain #Blockchain Technology #Smart contracts
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Peter Jonathan Wilcheck – November 2018 #Blockchain #Blockchain Technology #Smart contracts
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