The launch in 2009 of Bitcoin made blockchain go from a theoretical to practical use, proving that this type of digital ledger system actually performs. Since then, companies have been experimenting with how they could make blockchain work for them.The benefit of blockchain is in its ability to transfer data in a quick, secure method between different entities without having one person to be responsible for protecting the information or helping facilitate transactions.
“It’s a ledger of transactions that have unique characteristics, and those characteristics help address problems in our systems and processes,” explained Ayman Omar, associate professor in the American University’s Department of Information Technology & Analytics and researcher with Kogod’s Kogod Cybersecurity Governance Center.
Blockchain helps build trust between entities where trust is not present or hasn’t been proven. This means that the entities that are trusting them participate in business transactions which involve data sharing or transactions that they might not otherwise have done or required an intermediary. The ability to trust is among the most frequently cited launch a token advantages. The value of trust can be seen in the earlier blockchain applications which allowed transactions between entities that did not have any direct connections, but required sharing of data or pay. Bitcoin and cryptocurrencies generally are the best examples of how blockchain technology can help build trust among people who don’t have a relationship.
- Decentralized structure
Blockchain’s worth is demonstrated in the absence of a central authority that can create trust, said Daniel Field, head of blockchain at UST which is a leading global supplier in digital services and technology. In addition to creating trust in the event that participants don’t trust each other because they’re not aware of each other, blockchain facilitates sharing of information within an enterprise’s ecosystem, that isn’t solely responsible. Supply chain is an example of this: a variety of companies including transport companies and suppliers to distributors, producers and even retailers desire or require information from other businesses in the chain, yet nobody is responsible for facilitating the sharing of all this information. Blockchain thanks to its decentralization, provides a solution this problem.
- Security and privacy improved
Security security of systems that are enabled by blockchain is a further benefit of this technology that is rapidly gaining. The increased security provided by blockchain comes from the way it actually operates: Blockchain is a permanent transaction record with complete encryption, which blocks fraudulent activity and other illegal activities. Furthermore, data on the blockchain is distributed in a distributed computer network, making it virtually impossible to be hacked (unlike traditional computer systems which keep data in servers). In addition, blockchain can address privacy issues more effectively than conventional computer systems, by obscuring data and restricting access.
- Costs reduced
The nature of blockchain can also reduce costs for businesses. It improves the efficiency of processing transactions. It also makes it easier to perform manual tasks, such as processing and aggregating data, and it also makes it easier to report and auditing procedures. Experts have pointed out that reductions that institutions realize with blockchain. They explained that the capability to speed up settlement and clearing translate directly into cost savings for processing. In general, blockchain can help companies reduce costs by removing middlemen – suppliers and third-party providerswho have traditionally handled the services that blockchain could perform.
Blockchain’s unique characteristics can increase trust, security, transparency and bring other benefits to businesses.
In removing intermediaries and replacing any existing manual processes used for transactions, blockchain is able to process transactions much faster than traditional methods. In certain instances the blockchain system can process transactions in a matter of minutes or less. However, the timeframes can differ and the speed at which a blockchain-based system is able to process transactions is dependent on a variety of variables, including the size of the data block is, as well as the amount of network traffic. However, experts have found that blockchain generally outperforms other technologies and processes with regard to speed. One of the more well-known uses of the blockchain, Walmart used the technology to locate the source of mangoes cut into slices in a matter of seconds — a procedure which had previously required seven days.
- Traceability and visibility
The use of blockchain by Walmart isn’t just about speed, it’s also about being able to trace the source of these mangoes as well as other items. This allows retailers such as Walmart the ability to more effectively manage their inventory as well as respond to any issues or concerns, and verify the authenticity of their merchandise. If a specific farm needs to re-call its products because of contamination, retailers using blockchain technology can pinpoint and eliminate the product that is produced by that specific farm, leaving the remaining products available for sale. As per experts, Blockchain technology can aid in tracking the source of various products, like medications to verify they’re genuine rather than counterfeit or organic items to verify that they are organic.
Immutability is simply the fact that the transactions once they’ve been stored on the blockchain aren’t able to be modified or erased. Blockchains are a system where every transaction is timestamped and datestamped, which means there’s an indefinite record. Therefore, blockchains is a great way to keep track of information over time, providing an accurate, secure audit of data. (That’s opposed to the more outdated, error-prone paper-based filing systems and computers that are damaged or even removed.) Omar highlighted the use of blockchain in Sweden to automatize real estate transactions and maintain track of title to properties in the event of a change of ownership to illustrate the benefits’ potential.
- Control of personal data by an individual
Blockchain provides an unimaginable degree of control for each individual over the data that one owns experts say. “In a world where data is a very valuable commodity, the technology inherently protects the data that belongs to you while allowing you to control it,” said Michela Menting, a research director at ABI Research. Individuals and companies can choose what parts of their digital information they would like to share who they want to share it with and to what extent, based on restrictions enforced by blockchain-enabled smart contracts.
Tokenization is the process by which assets’ value (whether it’s a digital or physical one) is transformed into a digital currency that is later recorded and distributed via blockchain. create a token is now a trend in the digital arts and assets, however it also has more broad applications that can facilitate business transactions, according to Joe Davey, director of technology at the global consulting business West Monroe. Utility companies, for instance can make use of tokenization to exchange carbon emission allowances as part of the carbon cap program.
The leaders of various industries are looking into and using blockchain-based solutions to tackle intractable issues and streamline long-standing procedures. Field pointed to using blockchain technology to check the accuracy of information on job resumes of job applicants to illustrate this technological innovation. Numerous studies have revealed that a significant proportion of applicants falsify their resumes and leave those hiring them with the tedious task of manually checking the details. However, pilot programs that permit universities participating to store information regarding their graduates as well as their granted degrees on the blockchain which is then access by hiring managers who are authorized can solve both problems and reveals the truth and obtaining the truth quickly and effectively.