The world of tomorrow is not just about artificial intelligence and automation; it’s also about building more trustless, transparent and decentralized societies. Blockchain is the underlying technology that can help achieve just that. According to a PwC survey, the number of executives who believe that blockchain will have a major impact on their industry continues to grow. As such, it’s important that you get up to speed on this emerging technology and its implications.
Blockchain is the technology that underlies digital currencies such as Bitcoin. It is an open, distributed ledger that can record transactions between parties efficiently and in a verifiable and permanent way. Everyone has access to the same record of transactions, but they are stored separately on the blockchain, which makes tampering with records extremely difficult. Blockchain is already being adopted in various industries, including finance, government and healthcare, and its widespread use could have a major impact on businesses across the board.
How blockchain works
Blockchain is essentially a database architecture implemented as a distributed, decentralized system. The data in the database is grouped into “blocks” and “chain”. Each block contains data about the previous block, a “hash” of the data in the current block and data about transactions made after the block, up to the genesis block. The chain is a “growing” list of blocks, which are linked to each other through the hash of the previous block. This makes tampering with the data in any one block very difficult, if not impossible. Each new block is added to the end of the chain, creating a new, longer chain. This entire process is recorded on the blockchain and cannot be altered.
What can be done with blockchain?
Blockchain has the potential to disrupt a wide range of industries, including financial services, supply chain, manufacturing, law, healthcare and government. The finance sector has been the most enthusiastic about the possibilities of blockchain, with banks, insurers, asset managers and other finance companies exploring how it could be used to power new business models, disrupt existing industries and create new digital products and services.
Benefits of blockchain
Highly accurate records – Every block in the chain contains data about the previous block, a “hash” of the data in the current block and data about transactions made after the block, up to the genesis block. This makes tampering with the data in any one block very difficult, if not impossible. This high level of accuracy and reliability is key to making blockchain useful for anything that requires record-keeping, such as financial services, supply chain and provenance for products.
Immutable records – Once a transaction is recorded and logged on the blockchain, it is immutable: it cannot be altered retroactively. This transparency and visibility provides greater assurance that money and assets are being transferred as intended, which is particularly important in the financial services industry, where trust and transparency are paramount.
Low cost and high speed – Blockchain transactions cost less than conventional methods, such as wire transfers and ACH (Automated Clearing House). As such, it could be a useful method for settlement and clearing in trading ecosystems where there are high transaction costs and delays, such as the financial services industry.
Impact of blockchain on business
Blockchain has the potential to dramatically impact how organizations do business, particularly in the areas of trust, transparency, cybersecurity, data management and risk management. Trust in business is built on relationships: building and strengthening these rely on transparency and visibility, which blockchain technology can provide.
Final Words: Going from digital transformation to fully-fledged blockchain transformation
As the use of blockchain technology continues to grow, so will its potential to revolutionize multiple industries. However, it’s important to remember that blockchain is still in its infancy, and its full potential will only be realized with time. While early adopters and technology enthusiasts are busy exploring its capabilities, it’s important that you too get on board and play a leading role in the blockchain transformation.