Blockchain Technology: Key Benefits, Uses & Challenges
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It is literally impossible to start off with a conversation on digital transformation and technology that does not mention the term blockchain. The ultimate proof of this is the never-ending hype around this rising technology. Did you know that as per Statistica, a total of 4.3 billion USD has successfully spent on blockchain till 2020? It has led us to believe that blockchain is truly the next big thing! Zero-knowledge proof blockchain technology is certainly going to bring about a huge revolution in the business field, with many industries getting heavily benefitted, just as in case of the internet or even Big Data.
In the further sections, you will get to have a clearer idea about this technology and what all revolutionary changes it is likely to cause in businesses.
Table of Contents
Firstly, what is blockchain technology? So going back to the basics, blockchain technology is somewhat like an openly distributed database, in simple terms, can also be implied as storage data or a computer file. This technology refers to a whole set of data being distributed across multiple computers while the entire blockchain is simply decentralized.
Further explaining the blockchain technology overview, this blockchain isn’t entirely controlled by a single entity such as a corporation/ government or even by a single person. These are quite in contradiction to the centralized databases and are totally administered and controlled by entities and businesses.
How does Blockchain Work?
So what’s blockchain in simple terms? A single file will incorporate multiple data blocks, each of which will have a significant connection with the previous block, thus forming a connected chain. A simple reason why it is referred to as a blockchain. Apart from the data, each block also holds records of the time when the block was edited or created in the first place. This feature is particularly crucial in the maintenance of a detailed record system, one which is not vulnerable to being lost or corrupted.
- Since a blockchain is created across multiple countries, it is easily possible for any user to view the entire chain.
- It is no longer a central administrator who processes all the maintained records and transactions, but now it’s an entire network of users who meticulously work in order to verify the data.
- You might have observed that the working is quite familiar to the way Bitcoin works. To be more specific, Bitcoin is actually one of the classic examples of blockchain technology.
Benefits of Blockchain
Let us now have a look at some of the major blockchain features & benefits and how these manage to offer you with numerous advantages.
1. You can now avail not just a snapshot, but an entire history of activities:
The regular databases will only manage to offer you with snapshots of time or data, which is updated only in that particular moment. But with blockchain, it is not just this, but you also get to access the previously existing information as well. In short, it is a database that accommodates history as well.
Read More : “Will Blockchain impact the digital economy?“
2. Completely decentralized:
Blockchain is far from having a central point of attack since it is entirely decentralized. It simply implies that the data is accessed and stored in a decentralized fashion making the whole process and system entirely secure. In contrast to the centralized system, such a system does not involve only a single entry point that could have otherwise been vulnerable to hackers. For this reason, blockchain technology solutions are well suited for transaction recording in an incredibly secure manner.
3. Absence of centralized control:
Since blockchain employs a decentralized method and allows replication in a number of places, you no longer require a central administrator. It will also greatly reduce the infrastructure and costs that would have come with it.
- Another main benefit of having such an incredible technology is that it improves the time effectiveness when it comes to real-time transactions. Additionally, a decentralized data system also helps in keeping businesses away from risks such as tampering, frauds, and even cybercrimes.
Blockchain technology also helps the entire process to be more transparent, especially when it comes to having proper tracking and an effective way of record creation.
Applications of Blockchain Technology
So when is the right time to opt for blockchain?
Blockchain benefits for businesses are innumerous, and the credit for that goes to its potential of providing the right kind of solutions for various kinds of businesses to operate smoothly. So let us now have a peek at the reasons that you need to opt for blockchain over the general database system are.
1. Securing and managing your digital relationships
The best time to come in contact with blockchain technology companies is when you wish to opt for a decentralized method of having a record system. Moreover, this point is also related to your general desire of wanting to establish secured digital relationships.
So at any point, if you wish to keep a transparent and long term record of land rights, property, or other assets, the perfect solution is to hire a skillful blockchain developer. A great recommendation for facilitating transactions and better digital relationships is to opt for Smart Contracts. Through this, automated payments cab easily be generated just when the parties involved in the transaction agree to the fact that their conditions were satisfied.
2. Avoids having a middleman/gatekeeper
Having a gatekeeper function or a middleman could simply be time consuming and expensive. For instance, many of the accommodation providers in the current scenario interact with their guests through a centralized platform such as Airbnb or Expedia.
Read More : “Why is Blockchain important for IoT?“
However, such difficulties can be overcome through blockchain technology and its applications that bring about a 360-degree turn in this system. A great example of this is the TUI travel company that has recognized the power of implementing blockchain and has employed it to build a direct connection between their customers and hoteliers.
3. For recording secure transactions
Few people might find standard databases to work fine to record simple transactions occurring between two partners. However, in situations where cases get complicated, the best way to ease out relationships and reduce possible risks is by introducing the blockchain.
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A typical example of this is the instance of Maersk, a shipping conglomerate that works along with IBM for bringing up a private blockchain that is capable of connecting numerous partners along with their clients across the entire industry. Another advantage is it’s ever so secure a decentralized system that is just the right option for any transaction types in general.
4. For keeping a record of previous information
Where you have a lot of data going around in constant flux, yet you desire to keep a track on the recorded history, blockchain technology is hands down, the top recommendation. Not only is it a safer method of recording all activities, but it is also a convenient and better option for keeping track of fresh data while not ignoring the pre-existing records. What’s more? Data is no longer prone to getting corrupted, and you can enjoy tons of advantages that accompany blockchain applications.
To implement the technology in a perfect manner so as to benefit you the most, you first need a clear conceptual knowledge about blockchain challenges and opportunities. Even though the benefits associated with this potentially vast technology are endless, there few instances wherein blockchain might not exactly be the solution that you might be looking for.
- In the first situation, you need to understand that blockchains are not recommended in case of super-fast digital transactions. While other general transactions might do fine under this technology, those transactions that are to be performed in milliseconds won’t essentially benefit from it. It is because blockchain demands a great deal of computing power. Therefore for faster transactions, a centralized database would be a cheaper option for faster transactions and effective storage of information. So if you are into super-fast transactions, looking up for a blockchain development company solution won’t exactly solve your problem.
- Secondly, by nature, blockchains are open databases or chains of information. So for those who prioritize confidentiality as a major concern, they must definitely opt for a private database rather than blockchain technology.
Ultimately, what matters the most is that if you are satisfied with the kind of database you are currently using. You might not consider switching to blockchains anytime soon. However, this article definitely shows that this technology is definitely to evolve and mature rather quickly in the upcoming years. With the said advantages and opportunities provided by opting for a decentralized database, it is quite evident that your business will certainly gain a huge advantage if you think about coming in contact with some of the most reputed blockchain technology development companies.
By incorporating blockchain technology, you add an extra layer of protection to the data by removing the middle man between the firm and partners. All the sensitive data regarding crucial business activities can be shared directly between them. As technology uses cryptography for security, hacking of the information is next to impossible.
There are three types, namely:
- Private: This is a centralized network that is built explicitly for some enterprise or firm. They use it to store and retrieve sensitive data with proper digital identity.
- Public: It is an open-source network that can be accessed by public users to carry out transactions. The prime use of this platform is the exchange of cryptocurrency and its mining.
- Hybrid: It is a combination of private and public networks. It offers the ability to set specific limits for the sharing of public and private data.
Blockchain as a Service aids the companies to enjoy the services of blockchain on rent. The service provider manages all the provisions to create the network. So, there is no additional investment of the user on special hardware and software to maintain the blockchain.