Is it worth to invest in an application using the Blockchain? Check how you can use the potential of this revolutionary technology, and see if it is worth to find a place for it in your business.
From the article you will learn
- what is the Blockchain;
- what are the uses of this technology;
- about revolutionary solutions and tools;
- about the benefits of using the Blockchain.
Currently, a lot is being talked about the Blockchain technology. This whole exaltation is fully justified, because it is a revolution in the area of data, its flow and security. The technology is more and more often used by various industries, especially where innovation, transparency and up-to-dateness of information count the most.
Blockchain – what is that
As already mentioned, Blockchain is a technology focusing on the issue of data collection, storage and management. Its basis – as the name indicates – is a chain created from blocks of various information about transactions made within the network; these may include, e.g. financial or commercial transactions, ownership statuses, stocks, electronic signatures, contracts, shares, sales/purchase receipts. This types of information create consecutive blocks; after the saturation of a block, i.e. filling it up with information, another block is created, also seeking to be filled up with data. Every user using the technology has access to a copy of information, and every copy automatically registers any changes made within its framework.
Blockchain as a distributed technology (without a typical information processing centre); ensures invariability, transparency; speeds up the information exchange process, and introduces decentralization into systems or applications. By employing the discussed technology, the intermediaries' interference in transactions becomes limited, which means that the need to give consent (e.g. to data processing or contact for marketing purposes) is eliminated, and the potential transaction costs are reduced. Blockchain is a new and safe way to manage your identity and digital resources, thanks to the introduction of private keys; they secure sensitive personal data of users against unwanted access.
Ways of using the Blockchain
Companies outdo each other to find ways to make the most effective and the most impressive use of the technology. Specialists are aware of the dynamic development of the blockchain in its initial phase, so they are constantly experimenting to get all the potential out of it. One can already distinguish several perfect types of its application.
Making the supply chain more fluid
The supply chain is created by all activities related to goods, from the moment of their production, to being distributed to a designated place. The chains have changed from local to global, and they can have different levels of complexity, and thus – a variety of number and quality of stages; they may include a number of geographic locations; their implementation may take many months, and involve tens of persons/entities. In medium and highly developed supply chains, it often happens that there is a lack of transparency, chaos arises, and thus – unethical or illegal situations occur.
Blockchain and the ability to track all activities in real time respond to these problems. It is a very attractive solution for organisations with multiple supply chains, carried out in an equal manner. Proper implementation of the technology often turns out to be the perfect support for maintaining control over the chain. The distributed digital Blockchain ledger facilitates exchange, making contracts, tracking transactions and making payments. It is all thanks to the aforementioned and interdependent blocks of information that can not be edited/removed, and can be checked by the persons involved in the processes.
Designing decentralised applications
Blockchain allows for creating decentralised applications (the so-called dApps). The back-end of such applications is located within the Blockchain network (and this is where the code is being executed); in addition, the source code of the application is open, and all data or records within a dApp are being stored in a public and decentralised Blockchain network. In contrast to traditional applications where data is centralised in one location, a decentralised application stores the information about transactions in a distributed ledger, which affects the transparency and security of processes, and – first and foremost – reduces the chances of single points of failure occurring.
Obtaining smart forecasts
As stated before, all data about the transactions made are in a dispersed ledger. Thanks to this, the tools used for Business Analysis and other analytical programs are able to scan large amounts of data, and then provide feedback on the identified (and hidden until now) opportunities to improve processes or dependencies between information. Providers of data/prognostic engines, and application developers are rewarded for making it possible to carry out a predictive analysis. The Blockchain technology ensures high transparency due to rejection/acceptance of information based on the basis of a democratic selection of tokens holders (consensus algorithms). Therefore, all predictions are based on current, authentic and verified data, which makes them highly probable.
Improving the identity management
Every day, millions of data pieces (e.g. personal data, know-how, patents, company secrets) are exposed to loss, uncontrolled manipulation, or theft by an unauthorised person. Using the Blockchain helps to avoid these situations. The technology is more and more frequently used to verify identity. When crating a Blockchain-based IAM platform, every user must pass an identity check, and as a result – obtain a unique and encrypted identification number. The decentralized nature of Blockchain means that the user ID must be verified by the entire network and a consensus must be reached as to the correctness of its authentication. In other words, all network nodes must match, so it's harder to fake identity.
Reorganising the Internet of Things
The IoT devices are connected to each other via centralised cloud service and information processing systems. On the Internet of Things, it is possible to use cryptocurrencies to conduct autonomous transactions between machines, eg to collect a fee for using energy from a neighbor's solar panel to supply a given machine in the garden or to collect a fee from the application by a self-driving taxi. IOTA is to serve such activities - a third generation cryptocurrency created for IoT. Such machine-to-machine payments are a perfect example of using Blockchain.
The amount of data processed within the created IoT ecosystem is constantly growing, which makes it impossible to maintain the efficiency of processes. The Blockchain technology is known for its distributed nature, resulting in the fact that all information is duplicated on millions of devices making up the network (in short: data is always accessible, and the time needed for its transfer is extremely short). At present, any failure in the Internet of Things ecosystem results in the risk of an information loss (e.g. personal data, information on partners or employees). This is closely related to the existing security vulnerabilities at the time of carrying out activities such as authentication, establishing connections, or making transactions.
Implementation of the Blockchain technology to manage the access to data within the IoT ecosystem forces the attacking aggressor to undertake additional effort in the form of getting through security barrier based on exceptionally resistant encryption standards. Thanks to the mechanisms of user identification, verification methods and data transfer, the technology is ideal for hosting IoT devices.
Solutions within the Blockchain
Apart from the main reason for creating the Blockchain technology, that is cryptocurrencies, currently there are many industries eagerly using its advantages, including banking, real estate, IoT, or companies focused on collecting and processing data. The technology introduces security, transparency and high accessibility, which is why it has been recognised by organizations whose operations are based on the use of sensitive data, e.g. health care and government organisations.
Digital resources and digital identity
Blockchain works very well in the areas where it is necessary to ensure a high level of process protection. Using cryptography, you can quickly prove that the given resources belong to a specific person. User can create digital signatures by using their private keys only. Other persons can check if the signature really belongs to the owner.
Tokenised resources make it easier to distribute and determine the digital ownership. Every user can create their token with the Ethereum ERC20 standard, and then start crowdfunding activities for their own platform ( Initial Coin Offering, ICO). Created tokens can represent, among others, gold or traditional currencies, stocks, securities, real estate rights or intangible assets.
The Blockchain technology can rightly be seen as a universal transaction ledger, because it allows you to keep records and to track every operation performed within it. The ledger is secure and redundant (that is – it retains the excess of information), while its architecture makes it impossible to make changes to previous records, and – thanks to the use of multiple nodes – guarantees high data accessibility. Blockchain ledger can be both public and private – it all depends on business goals and the final application.
Within the technology there are the so-called smart Blockchain contracts, that is – digital versions of traditional contracts, scripts or applications, that are saved in the blockchain. Smart contracts legally bind the persons concerned, and are built in the form of a code. The code contains principles and other information necessary for its execution. Its automatic execution in the Blockchain-based network is guaranteed only when all – strictly defined – conditions are met. Any person can read the code and see what the effect of its execution is. This is the benefit of a public Blockchain – the transparency. Examples of using smart contracts can be:
- storage of digital tokens and the possibility of using them only when the majority of persons signing the contract agrees upon it – a deposit with the use of a digital voting system. Otherwise, the funds will not be spent, and will be guarded by the Blockchain.
- creation of an auction system that automatically checks external results at a particular time, and awards tokens to winners.
Benefits arising from the Blockchain
The Blockchain technology and its nature bring many benefits:
- decentralisation and data sharing, which significantly increases the interest in the exchange of information between users;
- transparency of processes, thanks to which not only the private entities, but also the public ones decide to create Blockchain-based platforms;
- unlimited ability of processing huge amounts of data. Blockchain integrates all information contained within it, and creates a logical whole;
- convenient and secure exchange of information thanks to encryption protocols.
The technology is being constantly developed, and maybe soon we will see its another revolutionary functionality or use. It is worth to devote some time to verify if your business can benefit from Blockchain solutions.