Blockchain is no more limited to just the Cryptocurrencies; innovators have discovered wider applications of blockchain for various businesses. With a wide-spread adoption of blockchain technology across supply chains, healthcare services, financial organisations, government departments and others, it's already ahead of the curve. The benefits of blockchain are being realized in terms of its transparency, augmented security, and immutability. This distributed and decentralized technology has numerous advantages on the offer.
Transparency with Privacy
Blockchain is a distributed ledger maintained by a peer to peer network where every node on the network has the same copy of the ledger . The peers on the network are responsible for maintaining and validating the transactions through a consensus algorithm. Not every peer takes part in the consensus though they have access to all the historical transactions and the transactions being added to the ledger.
This is how the blockchain maintains the transparency across its network which not only eliminates the need for a central authority but also inculcates the sense of accountability and a responsibility to act with integrity.
The blockchain is a public ledger and users can view all the transactions; however, they can only see the digital identity of users making those transactions rather than personal information, hence enabling the privacy.
Increased Speed and Efficiency
Blockchain is a decentralized database which not only waives the need for a central authority but also streamlines the process, leading to faster settlements and efficiency. Currently, the transactions placed through a central authority like a bank takes 2-3 days for the settlement but blockchain has the ability to reduce the transaction time to minutes.
This advantage can prove to be a boon for international trades and transfers which usually take longer times because of the presence of parties in different location and time-zones. On the blockchain, the parties can confirm the transactions in no time; thus expediting the whole process.
Also, as the records are maintained in a single digital ledger, it saves the time of reconciling multiple ledgers for verification. And how blockchain stores the records actually aid in providing a highly efficient system with trust and transparency.
Blockchain is a safe and secure technology for recording transactions in several ways. Firstly, for adding any new transaction to the ledger the network needs to reach a consensus. Also, once something is added to the blockchain it cannot be edited as it’s an append-only technology.
Secondly, every time a new block is added to the chain it gets cryptographically hashed, storing its own hash and the hash of the previous block. Even a little tampering with the data will change the hash of the block; but the hash of the subsequent block will remain untouched leading to a discrepancy. Hence, making it difficult to change any data without changing the subsequent blocks, which is next to impossible.
Thirdly, blockchain is a distributed database on a peer to peer network where every node has the same copy of the ledger, tampering information at one node will not tamper the whole ledger as the consensus won’t be achieved. These features of blockchain make it immutable and safe from hackers and unauthorized people.
Blockchain is a time-stamped series of records and every time an exchange of goods or funds is recorded, it leaves an audit trail behind. All the historical transactions are easily available for anyone on the network to verify. One can also go back to the origin to see where it all began. The feature can help in verifying the authenticity of the trades and also prevent frauds during the business transactions.
If we look at the traditional supply chain, they are complex to track which leads to problems like unaccounted thefts or loss of goods. Even the time required to trace anything is huge. With blockchain, the supply chain could be made completely transparent as it records all the transactions chronologically on the same ledger. Anything can be traced back to its origin in no time preventing any fraud or malpractice.
In the current centralized way of doing a transaction, we have to pay some commission or fee to the middlemen or third parties for enabling the transaction, like a bank for the verification of a transaction, credit card companies for accepting payment at PoS terminals or third-party aggregators. Blockchain phase-out the need of third parties or middlemen for exchanges and transactions; thus, saving additional costs.
Blockchain can make music profitable again for artists by cutting out the music companies and distributors. A peer to peer music distribution system can connect the artists to the consumers letting the former sell directly to the latter, driven by smart contracts.
Blockchain has seen its fair share of scrutiny and speculations over a long period of time and it seems that the technology has emerged victorious. With these advantages, it presents an opportunity of an efficient and secure future; especially for the financial sector, government organisations, healthcare, and supply chain.