Cryptocurrencies of all kinds use distributed ledger technology called blockchain. Blockchain acts as a decentralized system for recording and documenting transactions involving certain digital currencies. Simply put, a blockchain is a high-volume ledger that maintains identical copies on all member computers within a network. The fact that the ledger is distributed in all parts of the network helps to facilitate the security of the blockchain.
While Bitcoin and other cryptocurrencies grew significantly among the mainstream finance and investment worlds in late 2017 and early 2018, they are now a niche area for crypto enthusiasts. However, blockchain technology remains a rapidly growing area for companies in many industries. Blockchain technology may eventually be seen as the most important innovation coming from the cryptocurrency boom. Next, we'll take a closer look at blockchain development company and see why this technology could be valuable to businesses of all kinds.
Blockchain basics
Depending on the blockchain, parties can view previous ledger entries and record new entries, although most blockchain networks have complex rules for new groups of records, "blocks," that add to the previous record string. The blocks and the content in them are protected by powerful cryptography, which ensures that previous transactions within the network cannot be created or deleted. In this way, blockchain technology allows the digital currency to maintain a reliable transaction network without relying on the central authority. It is for this reason that digital currencies are considered 'decentralized'.
While blockchain has a reputation for its role in facilitating the rise of digital currencies in recent years, there are also many other non-crypto uses for this technology. In fact, some blockchain supporters believe that the technology could go far beyond cryptocurrencies themselves in terms of its overall impact, and the true potential of blockchain is not being realized now. Thus, blockchain technology is likely to be much more embraced by financial advisers and many others in the investment world in the coming years, whether it is tied to a particular cryptocurrency or being used in other applications.
Cross border payments
Traditionally, transfers of value have been costly and time-consuming, especially for payments made across international borders. One reason for this is that, when it comes to multiple currencies, the transfer process generally requires the participation of multiple banks in multiple locations before the recipient can collect their money. There are already services to facilitate this process in a faster way, but they are usually expensive.
Blockchain technology has the potential to provide a much faster and cheaper alternative to traditional cross-border payment methods. In fact, while normal costs for cash remittances can be as high as 20% of the transfer amount, blockchain costs can only allow for a fraction of that, as well as guaranteed, real-time transaction processing speeds. There are hurdles to overcome, including regulation of cryptocurrencies in various parts of the world and security concerns. However, this is one of the most promising and talked about areas of blockchain technology implementation.
Key takeaways
-
Blockchain technology has widespread applications in many industries.
-
Blockchain is already used to facilitate identity management, smart contracts, supply chain analysis, and much more.
-
The full potential of blockchain technology has probably been discovered.
Smart contracts
Smart contracts are often considered a very powerful application of blockchain technology. These contracts are actually computer programs that can monitor all aspects of an agreement, from facilitation to execution. When the conditions are met, smart contracts can be fully self-executing and self-applying. For supporters of smart contracts, these tools provide a more secure and automated alternative to traditional contract law, as well as an application that is faster and cheaper than traditional methods.
The potential applications of smart contract technology are essentially endless and could be extended to almost any business area where contract law would normally apply. Of course, while highly enjoyed, smart contracts are not the place for old-fashioned magic. In fact, the Decentralized Autonomous Organization (DAO) case is a cautionary tale and a warning to investors not to accept that smart contracts are better than the information and organization that a user enters. However, smart contracts remain one of the most exciting ways Blockchain development services has expanded beyond the cryptocurrency space and into the broader business world.
Identity management
One of the biggest problems of the Internet age is identity security. As diligent as many individuals and organizations are in maintaining their identity online and obtaining private information, nefarious actors are constantly trying to steal these digital items and profit from them. Blockchain technology has already demonstrated the potential to change the way identity management is carried out online.
Blockchain offers a high level of security, thanks to the independent verification processes that take place in the member computers of a Blockchain development company. In digital currency cases, this verification is used to approve blocks of transactions before they are added to the chain. This mechanism could be implemented as easily as other types of verification procedures, including identity verification and many other applications as well.
There is a wide range of applications for blockchain and identity management. For example, blockchain could be used to help retain voter information and ensure the smooth running of the electoral process. Blockchain could be used to transfer user data safely and efficiently across platforms and systems. The technology could also be used to maintain and protect real estate records, titles, and much more.
Supply chain uses
For many companies in different industries, an efficient and well-functioning supply chain is the key to success. Blockchain technology has already been used in many industries as a way to control supply chains and ensure their efficiency. This could eliminate human labor and the potential for error from a critically complex process.
At this point, blockchain is a technology with an exceptionally broad set of potential uses. While blockchain is known for its connections to the growing world of cryptocurrencies, other applications have already been explored. However, perhaps the most exciting thing is that new ways of using blockchain are emerging every day. Therefore, whether you are directly involved in the digital currency space or not, it is essential to develop an understanding of blockchain and how it can be used to change the world of business and investment. (For more, see: All About Amazon's New Blockchain Service .)
