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How Blockchain Technology Works
Besides sounding like something out of a sci-fi movie, blockchain technology really is seemingly futuristic in many ways.
This article will serve as your definitive guide to understanding what blockchain technology is, how it works, and the overall benefits it holds for businesses.
Defining Blockchain Technology
Blockchain technology is a structure that stores transactional records also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’
Then, every transaction in the ledger is authorized by the digital signature of the owner, which authorizes the transaction and safeguards it from fraudulent activity. The information the digital ledger contains is extremely secure.
Let’s look at that a bit more lucidly.
For example, let’s imagine that blockchain technology is a Google Doc that is shared between several computers on the same network. The document is filled with all of the transactional records of the business. Now, imagine that everyone only had ‘read-only’ access. The information is shared, able to be seen, the records are kept safe, and nobody can tamper with the records. That is blockchain technology in allegorical form.
Blockchain Technology Uses
Blockchain technology, in simpler terms, is shared information among numerous computers in one network. Everyone within the network has access to, or shares, the information, but cannot corrupt it. Although blockchain technology brings to mind secure payment for larger corporations, there are many more beneficial services associated with blockchain technology.
- Cryptocurrencies– Most cryptocurrencies utilize blockchain technology to record their transaction records. These records can be stored and shared with entities within the same network. Because blockchain technology is heavily secured, none of the parties can tamper with the information.
- Cryptocurrencies– Blockchain technology allows for some important contracts to be partially or fully completed without either party being physically present. The legalities of these contracts are still in review but are becoming more popular. Being able to conduct business through blockchain technology helps all parties to eliminate some travel expenses by not needing to conduct in-person meetings and increase productivity in the workplace.
- Financial Services– as you may already know blockchain technology has morphed the financial sector into a more secure and extremely efficient market. The advances in blockchain technology allow large secure financial transactions between multiple parties around the world. Blockchain technology has also allowed for advancements to where customers can easily pay frequent or everyday expenses such as traffic tickets, utility bills, medical expenses, etc. on a secure network.
- Supply Chains– Another use of blockchain technology is the delegation of tasks to computer systems, robots, etc. to perform tasks. Using blockchain technology allows the codes for these tasks to be embedded into software and eliminate the need for human involvement. This helps with efficiency and accuracy in the production process and for human employees to be utilized in areas of greater need.
- Storing Sensitive Information– Blockchain can store extremely sensitive information for the healthcare field. Mass storage of patient records and financial information is an ever-growing need worldwise. Blockchain technology also allows the transfer of this information from one healthcare institution to another with the patient’s consent.
Benefits of Blockchain Technology
Depending on which demographic you ask, you will most likely hear two short answers on what the most beneficial aspects of blockchain technology are.
The corporations that use blockchain technology in their daily business transactions will say that the efficiency that it provides is extremely valuable.
However, consumers that utilize blockchain technology will most likely speak of the security that it brings.
That said, blockchain technology also has humanitarian purposes. Technological advances make it entirely feasible to financially assist those that are in need in developing countries. Microloans, micropayments, and digital wallets make it possible for those demographics to receive aid.
The benefits of blockchain technology don’t just stop there. Here are a few more benefits in list form:
- Automation– A great asset that blockchain technology brings to a business is the ability to automate regularly used processes. These systems will look different for each business but can include automatic payment or delegations to name a couple.
- Security– As we mentioned above, the security that blockchain technology is extremely advanced and regulated. Records are able to be stored in a central place where they cannot be tampered with.
- Positive Worldwide Changes– It turns out that blockchain technology doesn’t just positively affect large corporations. There are positive implications worldwide thanks to blockchain technology. As a matter of fact, this kind of technology has positively impacted agriculture, environmental preservation efforts, aid in the wake of natural disasters, etc.
Blockchain Technology in Review
The advances in technology as it relates to blockchain are really awe-inspiring.
Institutions of all kinds can benefit from the security and ease that blockchain technology brings. Hospitals, banks, and large corporations may be the first that comes to mind, but there are many other uses for the technology that present a positive impact for a spectrum of sub-groups.
You can rest assured that any entity you’re interacting with that uses blockchain technology has the safety and security of your data storage in mind.