Blockchain technology is an advanced form of record keeping. It is key to cryptocurrency transactions and it has started to see use in many other industries including healthcare and supply chain management.
Each blockchain is essentially a tamper-proof digital ledger that can be viewed by anyone. Data is stored in the form of ‘blocks’ in a chain. Complex mathematical ‘cryptography’ is used to store each block and the data is stored across thousands of computers. No-one owns this data – it is ‘decentralized’, meaning that no-one has authority to censor it, alter it or delete it.
This technology has many advantages. Below are just some of the biggest benefits of blockchain technology.
Security
Blockchains are digital fortresses that are virtually impossible to hack. Whereas traditional databases are stored in one spot, blockchains are spread out across a network of computers (nodes), and each transaction is carefully encrypted. In industries like banking, using blockchains can result in added protection from fraud and data breaches.
Transparency
‘Off-the-record’ transactions can also be prevented by using a blockchain. A blockchain forces every transaction to be timestamped so that there is evidence of it. And anyone can view these timestamps. For this reason, using blockchains can be a way of creating consumer trust. Walmart for example tracks every element of its supply chain on a blockchain so that employers, suppliers and customers alike can track every product from food to shelf.
Traceability
Leaving behind a data trail makes it possible to carry out detective work and more easily solve issues. Using a block explorer, it is possible to identify strange crypto transactions and potentially prove crimes. In the case of a food supply chain, blockchains can be used to find sources of contamination. Meanwhile, in the diamond industry, companies like Everledger have started using blockchains to prove that their stones are conflict-free.
Speed
When it comes to financial transactions like money transfers, certain transactions may take days to be cleared by a bank – especially over a weekend. Blockchain transactions can contrastingly be executed in minutes or seconds. For transactions that need to be carried out quickly, using a blockchain can be the best solution as it enables you to bypass banks and skip all the paperwork and intermediaries. Ripple’s network has become particularly popular for its speed, as is a common way for businesses and freelancers to pay customers in other countries, eliminating the obstacles that usually come from transferring money.
Reduced admin fees
One of the biggest wins of blockchains is the ability to slash admin costs. This is particularly the case when transferring large amounts of money from one country to another – being able to use a cryptocurrency via a blockchain eliminates the need for currency exchange fees. Many migrants use blockchain-powered platforms like Stellar for regular cross-border payments to save costs. Some insurance companies also use blockchains to automate claims and cut out paperwork fees.
Conclusion
All in all, blockchains offer increased security, transparency, traceability, speed and reduced admin fees. They are a superior form of ledger keeping that is certain to become more widely adopted in the future as more people get their head around the tech. Could your company benefit from switching to blockchain technology?
