Blockchain is one of the most talked about emerging technologies of recent times, as well as one of the most sought after. But despite the popularity and the buzz around it, there is still some confusion about its application and its capabilities.
Before moving to its usage across different business functions, lets look at what exactly it is.
IBM defines blockchain as a “shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.” (ibm.com, 2022)
Research on blockchain goes back to 1990’s but early implementation only started in 2009.
According to HBR’s article The truth about blockchain, “Blockchain—a peer-to-peer network that sits on top of the internet—was introduced in October 2008 as part of a proposal for bitcoin, a virtual currency system that eschewed a central authority for issuing currency, transferring ownership, and confirming transactions.” ()
There are 3 key elements to it, which are as follows:-
- Distributed ledger technology
Distributed Ledger Technology (DLT) refers to the technological infrastructure and protocols that allows simultaneous access, validation, and record updating in an immutable manner across a network that’s spread across multiple entities or locations. (investopedia.com, 2021)
- Immutable records
Tamper-proof transaction records which cannot be changed, replaced, or altered by or for any entity after the data has been stored on the network’s shared ledger. Incase of any error a new transaction must be executed.
- Smart contracts
Smart contracts are self-executing contracts where the terms and conditions to be executed are lines of code. These contracts are stored on blockchain to speed transactions, as set of rules.
Before delving into its use cases let’s look at the benefits of using blockchain.
- Trust
Due to its decentralized nature and feature of immutability, blockchain provided assurance to individuals and organizations of receiving accurate and timely data. As a members- only network confidentiality is maintained, as it can be accessed only when access is granted
- Security
Consensus on data accuracy is required from all network members, and all validated transactions are immutable because they are recorded permanently. No one, not even a system administrator, can delete a transaction. (ibm.com, 2021)
- Efficiency
With a distributed ledger that is shared among members of a network, time-wasting record reconciliations are eliminated. And to speed transactions, a set of rules — called a smart contract — can be stored on the blockchain and executed automatically (ibm.com,2021)
Application of blockchain technology for industries:-
- Banking and Finance
- Supply Chain
- Healthcare
- Property Record
- Government
- Retail
- Manufacturing
- Insurance
- Financial Services
- Oil and gas
- Telecommunication
Some of the use cases of block chain include money transfers, smart contract, IoT, security, logistics, NFTs and many more. It is a technology being used in different industries for different purposes changing how things are done everywhere by building greater transparency and trust.
References
IBM: https://www.ibm.com/topics/what-is-blockchain
HBR: https://hbr.org/2017/01/the-truth-about-blockchain
Investopedia: https://www.investopedia.com/terms/d/distributed-ledger-technology-dlt.asp
Hi Anandya,
I think the technology of blockchain is very interesting and promising, at the same time I am concerned about the limitations of the technology. Such as: slow processing speeds leading to difficulty in scaling, high energy consumption and thus a high cost of operation and the difficulty of integrating a blockchain in a legacy system. Until these flaws are resolved I do not see a wide scale adoption of the technology. I would love to hear your thoughts on this.
Thank you for your explanation on blockchain! I feel like most people talk about blockchain without understanding the core dynamics of the technology. I’m wondering whether blockchain technology will continue to expand its usage, since crypto currencies are in a downfall. I’m afraid that the connection between crypto and blockchain is so strong, that a decline in crypto might negatively impact people’s thoughts on blockchain. What is your view on this?