Let’s say you have an excel sheet containing various financial records. The same sheet is now duplicated across multiple computer systems to contain the same thing only this time as you update a single record on one system, it reconciles the same financial record on every other system on the same network in real time. You now have a 1% understanding of what Blockchain is and what it is truly capable of.
According to Investopedia, “Blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions and data records.” Decentralized basically means the data isn’t stored in one central location hence it isn’t susceptible to hack attacks. There’s no fear of the data being corrupt because as mentioned earlier, the data is present on multiple systems referred to as nodes.
“By shifting away from the traditional centralized database management structure, a network is no longer exposed to a single point of failure and instead evolves into a robust, distributed web.” – Consensys
Additionally, Blockchains are secure by design and locked down by clever cryptographic hashing algorithms.
Some of the biggest advantages of Blockchains are: disintermediation, consistency, transparency, integrity and lower cost of transactions.
Now this bring us to our next question, what is Cryptocurrency? With the introduction of Bitcoin, the term ‘Cryptocurrency’ became quite prevalent in the tech world.
Cryptocurrency or a virtual currency is a form of digital exchange of currencies that have no physical presence in a highly secure and encrypted manner. Cryptocurrencies most of the time are used for discreet online transactions however they can be used for in-person transactions with the help of app based mobile transactions. Unlike mainstream currencies, these aren’t tied to any sort of financial institution or even a government as a matter of fact, making it virtually impossible for it be restricted or confiscated.
What sectors will benefit the most from Blockchain technologies?
- Healthcare – Maintaining medical records of patients across the world. Insurance details for payment processing and fraud prevention. Database management of medical professionals.
- Finance – Reduce infrastructural costs. Ensure maximum transparency of transactions
- Retail – Optimum and efficient utilization of resources for supply chain management
- Government – Ensure efficient utilization of public funds for development with full transparency to eliminate corruption.
“…blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” – HBR
The Harvard Business Review (Jan/Feb 2017) suggested that blockchain is a foundational technology and thus “has the potential to create new foundations for our economic and social systems.” It further observed that while foundational innovations can have enormous impact, “It will take decades for blockchain to seep into our economic and social infrastructure.”
Problems with Blockchain
Despite the numerous advantages of Blockchain technology, there are some apparent disadvantages too stemming from lack of awareness and understanding, before the technology matures and adoption increase.
- There aren’t well established regulations when it comes to blockchain technologies. Because it is relatively new, it becomes a continuously changing landscape for various entities especially the banking sector.
- Error Fatality – No matter how promising this technology might be, there is always an element of human error. Nodes continuously communicate with each other and picking out an error is an extremely complex task because its replicated in every system.
- Network Size – In order for you to reap the maximum benefit out of a blockchain protocol, you would require a large number of systems widely distributed to form a robust network. This can sometimes prove to be expensive given the infrastructure required.
- Transitioning from an organization’s existing technological infrastructure to adopt the blockchain protocol can be a lengthy process due to political, legal and economical obligations. Majority of companies today aren’t wired to handle this kind of innovation yet. So it may be a while before we see this widely adopted.
When it comes to technology, pretty much everything keep evolving at a fraction of a second. Things like cloud computing or artificial intelligence or even quantum computing seem like a thing of the past (Don’t worry it’s not) but this is the reality of things. Scary. But very real.
VIDEO: Blockchain explained
Here’s a video where Lorne Lantz explains at a TEDx Talks on Blockchain: