According to Deloitte’s 2018 survey of over 1,000 business executives, 39% of respondents stated their companies would invest at least $5 million in blockchain technology in the next year. Blockchain is a revolutionary technology with the potential to disrupt companies across a wide range of industries. Therefore, business owners should understand the many potential applications that can support and help grow their businesses.
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Blockchain Technology Explained
Blockchain is a technology that records information about a transaction on a distributed, decentralized, public ledger. Each transaction is then recorded in a digital “block” that is added to the existing chain of information. Blockchain technology is revolutionizing security with its ability to transfer digital ownership in a decentralized manner that does not require trust in a central entity.
To understand blockchain, it’s important to know its essential components. The ledger is a digital record book of transactions conducted on a blockchain. The term mining refers to the process of adding blocks to the blockchain via solving a complex mathematical problem. A wallet is a component containing public and private cryptographic keys used in transactions, which is a payment recorded in the blockchain’s ledger. A public key is a shortened version of a private key and the user’s digital signature used in a transaction. Ultimately, building the blocks rewards computers with cryptocurrency; digital currency that users can use to make purchases using the blockchain.
How It Works
The first step in the process involves a user making a transaction with cryptocurrency. Then a network of computers works to solve the complex math problem to confirm transaction time, dollar amount, and participants. Next, the transaction is publicly recorded in a block, given a unique ID code called a hash, and attached to the previous block. Finally, each networked computer stores an identical copy of the blockchain ledger.
Benefits and Applications of Blockchain
Blockchain technology offers a host of benefits to businesses and organizations of all sizes: greater efficiency, improved supply chain management and increased transparency.
Benefits and Drawbacks of Blockchain
There is plenty of upside to using blockchain. Blockchain’s decentralized data greatly enhances record security. It also doesn’t store identifying information, making the system highly anonymous. Because access to blockchain’s network of computers requires the solving of a complex math problem, there’s a built-in level of trust involved. Blockchain also receives high marks for its accuracy and confidentiality.
There are also a few negatives. One such hindrance is the lack of scalability, as it’s difficult to maintain security and privacy as the number of transactions increase. Also, metadata and statistical analysis could result in pattern recognition that could cause privacy issues, despite blockchain’s security strength. Other limitations include its lack of suitability for all applications and its lack of regulation.
A Myriad of Applications
One of the key ways to apply blockchain is through supply chain management. In this instance, blockchain can track the origin, quantity and movement of goods, simplify transfers, and increase transparency and efficiency. A second application can be quality assurance, as it can boost product safety and can be used to conduct investigations with greater ease. Accounting departments may find it handy, as it can safeguard data from tampering, increase efficiency, and it follows a highly traceable audit trail. Additionally, blockchain can be used to track energy supply and usage and can improve the monitoring of clean energy. Finally, blockchain can be utilized for smart contracts, as they can automatically validate, sign and enforce contracts – a time- and money-saving process that could eliminate the need for mediators
Incorporating Blockchain Technology in Business
Large corporations such as IBM have developed blockchain platforms that can be used by businesses of all sizes. Applications extend to a variety of industries and business functions.
Blockchain in the Real World
IBM’s blockchain platform is built on an open-source framework called Hyperledger Fabric. It supports the full life cycle of a multiorganization blockchain network, and it can be used on-premises with a cloud provider or in a multi-cloud environment. It boasts numerous applications, including global trade, cross-border payments, and food.
American Express is also getting into the blockchain business. Their blockchain will offer SKU-level data for every product purchased via promotion. The info revealed to AMEX will include time, location, item bought, and purchase method, and any data shared with merchants will remain anonymous and secure. The blockchain’s purpose will be to offer more relevant promotions, and to form deeper relationships with merchants.
Lockheed Martin is another leading corporation involved with blockchain. They’re working with Guardtime Federal to integrate blockchain technology that will help manage supply chain risk, support systems engineering and software development, address the threat of data manipulation and cyberattacks, and increase rates of mission survival.
More and more applications of blockchain technology are being developed, creating a myriad of opportunities for a variety of industries. Business owners and leaders need to stay aware of developments in blockchain tech and actively consider implementing the technology into daily activities to benefit and grow their businesses.