There’s always something new in technology. Lately, blockchain has garnered attention among technologists in industry. Much like Big Data, and data science, it is revolutionizing industry, one vertical at a time. It has developed new frontiers in technology, business productivity, and has paved way for new innovations in software development.
What is blockchain technology and how is it useful?
The usefulness of blockchain lies in the way it stores data. It is majorly a data storage technology. Unlike previous databases, it stores data in a decentralized way, meaning data is distributed over several computers, instead of one. These computers are called nodes. Every time a new data is created, it is stored along with data details such as date of creation and modification. Every time a new data / block is created, it is added to previous block and forms a chain. Hence, the name blockchain. Since a single authority doesn’t have control over the entire database, it reduces data manipulation, hacks, and enhances security.
Think it as a gated database where several gates (nodes) are required to be unlocked before one can see the complete chain (data). This adds security, transparency, and scalability to transactions. Given these reasons, blockchain industry has been flourishing widely.
Benefits of blockchain
1. Permanent records — Any transactions made on a blockchain network is indelible. Regular data shows timestamp along with the latest version of the data. Blockchain, however, shows data that existed before. It saves every change that is made in the block. This makes data safe from corruption or manipulation. Hence, a good alternative to recording monetary transactions.
2. Incredibly safe — As complete data is distributed over a network of computers and is replicated fully when accessed. So there’s no single point of entry for hackers. This makes blockchain technology incredibly safe against hacking.
3. Decentralized architecture — Unlike many technologies, blockchain doesn’t require supervision of an authority. The decentralized architecture of blockchain enables to access transactions from anywhere. This removes the cost required for infrastructure and other resources.
Applications of Blockchain
Blockchain has found applications in many areas of industry. The most prominent application is Bitcoin and cryptocurrencies. Currently, there are over 2000 cryptocurrencies, all developed under the unifying distributed ledger and cryptography technology. Using the power of blockchain, or more specifically distributed ledger technology, business processes can be easily transformed. Here are some applications when blockchain can be immensely helpful -
1. Build a transparent, secure, shared system of record
Digitalizing business-customer relationships is the new norm. Situations where businesses are looking to build relationships with customers and maintain a transparent record of customers’ assets (property), transactions, etc., blockchain are helpful. Smart contracts, for instance, built on blockchain, release payment when set conditions are met between involved parties.
2. Remove middlemen
In many businesses, middlemen take a huge cut, which reduces profit for a business and increase the cost for customers. For instance, OTAs (online travel agencies), where customers pay and a part is taken away by OTA before reaching hotels, tour & travel agency, and others. Blockchain can take away middlemen and increase profit.
3. To record safe and secure records among multiple parties
Blockchain is a distributed database with access to multiple owners. This capability can be utilized to develop a network where multiple parties can contribute in their own capacity and records will be maintained to see any time required. Conglomerates working with multiple partners and customers can utilize this feature very well and maintain a safe record of transactions made with partners and customers.
4. Maintain a record of data changes
Blockchain maintains record of changes made to data. This is particularly helpful where data is generated continuously. This data can’t be deleted or tempered with. Recording changes in data while also having access to the up-to-date data is immensely helpful.
Blockchain with all its prowess has turned out an ideal technology for recording transactions. However, in many cases, it is not a go-to technology. For instance, blockchain requires super computing power. It is a challenge for it to record transactions that take place in milliseconds. For super-fast transactions, traditional database solutions will be more cost-effective.
Blockchain, as explained earlier, creates a chain of data which is accessible to multiple people. If confidentiality is a concern for a business, blockchain again would not be an ideal solution.
In summary, blockchain is still an evolving technology. As the technology matures, may be it will be suitable for all use-cases that have yet not be realized with it.
Originally published at https://www.qatarday.com.