The blockchain technology is one of the most talked and hyped technologies across all industry verticals. Many large companies are spending a huge amount on the research of blockchain technologies to integrate it into their products. However, not much information about blockchain technology is available in the public domain.One thing that people relate with blockchain technology is Bitcoin. However, the scope of blockchain technology is not limited to digital currency alone. Let’s delve deeper to know about blockchain technology and its suitability for different projects.
What is blockchain?
Blockchain technology is a great way to manage data. It competes with traditional databases that are used today. Since the inception of computer technology, we have been using relational databases that store information in updatable rows and columns. Decades of research has made relational databases a secure database with expanded functionalities. The only problem with relational databases is the task of storing and updating data is handled by few entities and you can’t be sure your data is not hacked or messed by the entities handling it. Since data is one of the most important elements of all business transactions, entrepreneurs need something more secure. This is where blockchain technology comes into the picture.
Unlike traditional databases, the blockchain architecture removes the need for trusted authority. Public blockchains like Ethereum or Bitcoin are managed by strangers (with their computers) to store, compute, and curate and secure a perpetually growing set of data without any central authority governing it. Since blockchains are replicated across a peer-to-peer network, it is difficult to corrupt or delete data stored in this way. This one feature is most attractive for businesses where they want to protect their data from corruption and any kind of censorship.
Key features of blockchain technology
Blockchain technology increases the capacity of the entire network. The reason behind this is there are a lot of computers working simultaneously to process and authenticate blockchain transactions. When a large number of computers are working together you have a larger amount of computing power at your disposal than when working with few devices.
With blockchain technology, there is not even a single chance for a hacker to completely shut down the system. There have been events where even the most secure traditional databases have been hacked but bitcoin is not hacked to date. The reason behind this advanced security is the blockchain technology uses multiple nodes to complete and authenticate transaction and these nodes confirm the transaction. It is almost impossible to hack every node or computer participating in the blockchain transactions at the same time.
Decentralized systems are slowly becoming the way of working where data is stored on the Internet for easy access but the owner has control over the data through a private key. Such a working model is useful in various industries like finance, real estate and other industries where the data in the form of databases or documents can be shared or transferred easily by the owner through the Web.
The authenticity of documents and data is an important factor in many cases. In blockchain, a hash is created for every data type and document created in the network. A hash works like a fingerprint that allows the unique algorithm to process data and enables its conversion into fixed length output. Hash is unique for every single transaction. Whenever a transaction is added in the distributed ledger, it contains the previous block’s hash and also has hash of current transaction that is used to build the new block.
Where is blockchain technology used currently?
Blockchain technology is being used in various fields of business. Some of them are
Speed up payroll
Blockchain technology is used to speed up and secure payroll transactions. It is particularly used by businesses that are involved in building blockchain businesses and have remote employees across the world. Transactions based on blockchain technology update faster than traditional banking transactions. Another benefit is companies can create their own digital currencies that can be used to give incentives to their employees.
Blockchain technology is used to enhance the security of cloud storage systems. Cloud storage enables businesses to access files and documents from any place. Users who require more space than a company owns on a cloud storage can use the blockchain technology to rent a hard drive or a server for additional space. In this model, the distributed cloud storage solution uses a peer-to-peer decentralized cloud network setup where files are stored on nodes and transmitted in an encrypted format.
Simplified data sharing for health service providers
The health care industry generated big volumes of data on a daily basis. This information is stored on a different computer which makes their access difficult. The blockchain technology serves an easy way to store data (health records) in decentralized databases securely that can be easily accessed from any location.
The distributed ledger system is used to complete transactions in a lesser time than banks. Using blockchain technology international payments can be sent in a fraction of time and the whole process is safe and transparent.
What types of projects will benefit from the use of blockchain technology?
Here are some use cases that show which types of project can benefit from the use of blockchain technology.
a.) Projects with multiple entities where more than one entity is required to make changes in the database can use the distributed ledger system. In such a project, the blockchain technology removes the need of trust between entities as the transactions are transparent and easily accessible by any partner entity.
b.) Projects which need to exclude central management or intermediaries from the process can benefit from blockchain technology.
c.) Projects that involve processing of limited data can use the blockchain technology. The technology does not work efficiently with Big Data as yet.
d.) Projects that need a heavy and secure framework like distributed ledger system can benefit from the use of blockchain technology.
Will it make your project more effective?
If your project deals with some transactions of any kind or data, blockchain technology might help make your project more effective. The distributed ledger technology can provide you with efficient and safe ways to record and transfer data.The data created, stored and transferred will be transparent, protected from outages, and accessible at all times. Right now cloud technology is used to securely share date among employees. Though cloud systems employ high-grade security algorithms to keep your data safe, they are not completely flawless.
Blockchain technology can make cloud storage systems untouchable, immutable, more robust and secure and less prone to data loss, human errors, and hacking attacks. The use of distributed ledger technology will increase the security and safety of every record in terms of exchanged values between individuals who are part of your project. All transactions related to the project will be stored in a decentralized database which can be monitored for transparency and authenticity.
You will have a complete record of how much time is taken by employees to complete a specific task and document sharing will be more secure and easy. Blockchain technology is known to have a superior operational workflow that will help in risk reduction, time savings, and cost removals. By setting up a private blockchain network, the project manager will be able to communicate with all employees more easily and define scope, deadlines, budget, and deliverables which will be identified, monitored, verified, and validated as transactions.
Analysis of blockchain technology
The blockchain technology is useful to the business world in many ways. Since distributed applications run on a network of computers, you have a huge amount of computing power available that makes these applications blazingly fast. The distributed ledger system offers a higher level of availability than traditional databases that reside on few servers. In a distributed ledger system even if a part of the network fails, the ledger system works flawlessly without any performance problems. However, this benefit can be tricky and if some database fails to update correctly it will give rise to problems that can’t be easily solved in absence of a legal framework.
Also building and debugging distributed applications is quite difficult. Since the distributed application is expected to run in a computer with different hardware and software configurations, it can give rise to “mandelbugs” that behave differently on different systems and hence difficult to resolve.
Blockchain technology can be helpful in creating new and efficient business processes. But one fact that you must not ignore is distributed nature of blockchain transactions are hard to work with. The scope, definition, and functionality of blockchain technology and distributed ledger system are still at a nascent stage in comparison to traditional databases. There are several issues related to blockchain technology that needs attention and have to be sorted out before the blockchain technology becomes mainstream. If you are brave enough to face the challenges and find way out, you can integrate blockchain technology in applications and business processes. Now that you know the fundamentals of blockchain technology, you are free to decide whether blockchain technology fits your project needs.
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