Blockchain – One of the most disruptive technologies?
One of the disruptive technologies and one with perhaps the widest impact on a variety of businesses is undoubtedly Blockchain.
Often confused and mistakenly linked solely to Bitcoin (Blockchain was developed as the transaction platform for Bitcoin), it’s in actual fact much, much more.
Blockchain, in its simplest of terms, is a time-stamped series of immutable and incorruptible record of data managed by cluster of computers but not owned by any single entity.
Here’s how it works:
Two parties want to exchange information or execute a transaction of value. They record the transaction between them on the system.
This transaction is then broadcast to a decentralised database that forms a public ledger of all transactions. At this stage this becomes known as a block.
The network then collectively validates the block, ensuring that changes have not been made and that the transaction can now be processed.
The verified block is then added to a chain of previously verified and approved blocks now becoming what is referred to as a blockchain. All verified blocks are time-stamped, thus authenticating them.
The transaction (information or payment) now verified and approved, is delivered to the relevant parties.
Each of these blocks of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain). The blockchain network has no central authority — it is the very definition of a democratised system. Since it is a shared and immutable ledger, the information in it is open for anyone and everyone to see. Hence, anything that is built on the blockchain is by its very nature transparent and everyone involved is accountable for their actions.
This block is verified by thousands, perhaps millions of computers distributed around the net. The verified block is added to a chain, which is stored across the net, creating not just a unique record, but a unique record with a unique history. Falsifying a single record would mean falsifying the entire chain in millions of instances. That is virtually impossible.
So, what is so special about it and why are we saying that it has industry disrupting capabilities? Here are a few other potential uses for blockchain technology.
Payment processing and money transfers Perhaps the most logical use for blockchain is as a means to expedite the transfer of funds from one party to another. With banks removed from the equation, and validation of transactions ongoing 24/7, most transactions processed over a blockchain can be settled within a matter of seconds.
Data Sharing and Data Backup.
Data can be securely shared between different parties without the risk of tampering or corruption. Blockchain might also be the perfect way to back up data. Even though cloud storage systems are designed to be a go-to source for data safekeeping, they're not immune to hackers, or even infrastructure problems.
Digital voting Blockchain offers the ability to vote digitally and combines the ease of digital voting with the immutability of records ensuring a proper validated process.
Tax regulation and compliance Companies can use blockchain as a means to record payments (including VAT) and to act as a clear record for the revenue authorities.
Equity trading At some point, blockchain could rival or replace current equity trading platforms to buy or sell stocks. Because blockchain networks validate and settle transactions so quickly, it could eliminate the wait time investors encounter when selling stock(s) and seeking access to their funds for the purpose of reinvestment or withdrawal.
There are numerous other applications for this technology too and as the world becomes accustomed to using Blockchain, more traditional ways of doing things will be challenged.