The progressive success of distributed ledger technology is bringing new ways to achieve business goals by providing transparency to your digital assets.
It is nowadays very important to make business processes transparent and secure. As business operations are getting tricky so, there is a high chance of fraud or misrepresentation. In traditional systems, data is centralized and hence, at risk of a power outage or data loss. However, decentralized technology appears as a solution to such challenges.
In this article, we will cover the following points.
What is Blockchain Technology?
Blockchain is a particular type of decentralized database that stores data in the form of blocks. These blocks are linked with one another to form a chain where every block contains the address of its previous block. Therefore, the user can trace all the blocks in order to make sure the data integrity. Most of the time, Blockchain is being used as a digital ledger to record digital transactions. On the other hand, it can be used to store any kind of data. Data stored in the blocks is immutable and cannot be altered.
There is a complete process that runs upon every transaction. Whenever transactions take place, new blocks are added up into the blockchain with the agreement of all the nodes active on the network. In addition, this agreement is achieved using a consensus algorithm. There are three types of consensus algorithms
- Proof of Work
- Proof of Stake
- Byzantine Fault Tolerance
Moreover, smart contracts are the code snippets that control and govern all the transactions. Anyone can do smart contract development and deploy it on the network.
Use Cases of Blockchain?
There are many use cases of this decentralized infrastructure. However, we will see some of the practical use cases of Blockchain.
Supply Chain Management: By shifting the supply chain on Blockchain can give a great competitive edge to a business organization. Therefore, all the actors involved can check and track all the information about the products.
Healthcare: Blockchain enabled medical system enables the doctors to track the medical history of the patients.
Identity Management: Blockchain can digitize identities. Moreover, people can have full control over their personal information and can share their information with any other party with complete privacy.
Intellectual Property: Placing a Blockchain based system can mitigate legal disputes. Further, everyone over the Blockchain network can track ownership and rights.
Voting System: Digital voting using Blockchain technology can bring transparency into the system. Above all, participants can track votes and voter information.
Pros and Cons of Blockchain?
In this section, we will explore the pros and cons of Blockchain technology.
- Transparency: Data is verified and shared.
- Open source: Blockchain is entirely open source.
- Better Security: Blockchain uses cryptography to encrypt the blocks.
- Availability: Blockchain is always available and anyone can pull the latest data.
- Peer to Peer Network: There is a consistent exchange of information among all the nodes.
- Decentralized: Blockchain resides over a distributed network.
- Reliable: There is no chance of data loss.
- Storage Issues: As Blockchain grows, storage issues may occur.
- Complexity: Blockchain is a little complex infrastructure as compared to the conventional approach.
- Lack of Awareness: As this technology is at its early stage, you may not find many developers specialized in Blockchain.
- No Reversals: There is no way to modify or reverse the data that has been recorded.
- Key Management: Key management is the critical part because, once you lost your private key, you just lose all of your assets.
The advent of Blockchain for business is not less than a surprise. This modern approach has brought massive potential into the tech industry with its innovative and promising features related to data transparency and security. Furthermore, decentralized technology has a number of use cases and organizations are seriously considering it while formulating business strategies.
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