What is Blockchain Technology and how does it work?
What Is Blockchain Technology? As its name implies, 'blockchain' is a chain of blocks, which contain encoded information of a transaction on the network. And, being intertwined (hence the word string), they allow the transfer of data (or value) with a reasonably secure encoding through the use of cryptography. To illustrate this idea, it would be convenient to imagine an accounting book where all the inflows and outflows of money are recorded.
What is genuinely new is that the transfer does not require a third party to certify the information but is distributed in multiple independent and equal nodes that examine and authenticate it without the need for them to know each other. Once entered, the data cannot be eliminated; only new information can be added. The blocks are connected through cryptographic encryption, so modifying data from a block before the chain is impossible since you would have to alter the information in the previous blocks.
What applications does it have?
Blockchain technology has transformed processes in different economic sectors. Some platforms use 'blockchain' technology to make the supply chain of the products we eat visible, managing us to follow the path that food travels from when it is harvested until it reaches our table.
Electoral processes can also benefit through 'blockchain' technology since decentralized accounting for vote counting can be an excellent option to overcome the flaws in the existing audit systems in elections. In Colombia, the possibility of using this type of technology to systematize property titles or carry out validation of studies abroad has already been studied.
What are the benefits of Blockchain?
The transparent and unalterable nature of blockchain technology lends itself to several advantages for organizations:
- Transparency: the information on the Blockchain is visible to all participants and cannot be altered. This will reduce risk and fraud while building trust.
- Security: The distributed and encrypted nature of Blockchain means that it will be difficult to hack. This shows potential for business security, Data Analytics Tools and the Internet of Things (IoT).
- Fewer intermediaries: Blockchain is a virtual peer-to-peer network that will reduce dependency on certain external intermediaries. This makes processes more efficient and means fewer opportunities for data entry errors and lower transaction fees.
- Traceability: Since blockchain data is unalterable, it is ideal for tracking and tracing provenance items along complex supply chains.
- Automation: Blockchain is programmable, making it possible to automatically activate actions, events and payments once the conditions are met.
But Artificial Intelligence Strategy could have more uses aside from cryptocurrencies. In late 2015 Singapore developed a Blockchain-based invoice exchange platform. The platform allows banks to convert invoices into digital assets and record them in a distributed digital book. In this way, the platform makes it possible to track invoices, support supplier loans and reduce the risk of duplication of invoices. Each client receives a cryptographic identity to safeguard confidentiality.
However, it seems that the use of Blockchain does not finish taking off, probably due to the distrust of users towards cryptocurrencies. Are we facing the technology of the future or a new bubble? Only time will tell. It is advisable to read Blockchain Tutorial to learn more about it.
