Beginners guide to blockchain technology: Things you should know about Blockchain Technology in 2023.
The world is constantly evolving as well as everything in it and we are trying our best to keep up with it.
This doesn’t leave out business owners who are always looking for better ways to carry out their transactions seamlessly without unnecessary hitchhikes.
The world now is very digitized that people who own businesses do not need to be physically present to carry out their transactions anymore it can be done virtually with all your transactions records stored safely.
This is where Blockchain technology comes into play because it is now a worldwide phenomenon that is widely used by business owners across the globe.
This article will be discussing the ways blockchain technology has assisted many businesses to run their transactions smoothly on a virtual platform.
There is still a wrong misconception about blockchain technology. This misconception is that blockchain technology only involves cryptocurrency traders.
Which is not true! Blockchain companies have been very helpful to a lot of other companies like; Food Industry, Banking Industry, Real Estate Industry, and a host of others.
Now let us get an overview of things that would be discussed in this article;
- Definition of blockchain technology.
- How does blockchain technology work?
- Features of blockchain technology.
- Benefits of blockchain technology.
- Types of blockchain technology.
- Industries that use Blockchain technology
- Final thoughts
Definition of Blockchain
In simple terms, blockchain is a shared virtual ledger that keeps records of information in such a way that it would be extremely difficult to manipulate its details even when it is public information and anyone can see it.
Blockchain technology
This is the collection of transactional records to form a structure in which this structure is stored in the form of blocks.
These blocks have a time frame for how much information they can hold and when it reaches its full capacity it is saved as a timeline and connected to a chain of other blocks of information.
These full blocks are all linked together by what we call “chains”. You might think of blockchain technology as a virtual bookkeeper but it’s more than that.
It goes to the extra length of duplicating and distributing this transactional information to all the parties or networks involved.
Information that goes into the blockchain is irreversible which means it cannot be altered unless there is a majority agreement between all the other networks involved.
The main reason why blockchain was introduced by Stuart Haber and W. Scott Stornetta in 1991 was to reduce or eliminate indefinitely the third-party charges in transactions made by business owners in traditional financial institutions.
Blockchain technology was introduced to reduce the vulnerabilities of these transactions to human errors and unforeseen circumstances.
Now with blockchain technology in place, transactional records and information of users are kept safely in a digital platform that can be accessed anytime.
This is not only very convenient but it shows transparency between all networks involved.
How does blockchain work?
A blockchain needs a lot of technologies to function like Cryptographic keys, Peer-Peer networks, Digital ledger, Hash encryption, Proof of work, and Mining.
But we will only be discussing three major technologies; Cryptographic keys, Peer-Peer networks, and Digital ledger
- Cryptographic keys;
A cryptographic key normally consists of private and public keys.
This key is used as a digital signature between the parties involved in the transaction and without this digital signature to give the go-ahead transactions would not be approved.
The digital signature makes sure that all transactions are unique and equally secure.
- A peer-peer network
This is simply a group of individuals that act as authorities during a transaction and these individuals have to reach an agreement before a transaction can be approved.
When these individuals decide to authorize a transaction it is approved by a mathematical verification.
Digital ledger
This is a structure that keeps records of all transactions. This ledger protects the information from getting manipulated by hackers or worse stolen.
With the combination of all these technologies. Blockchain technology uses cryptographic keys to carry out a lot of different digital transactions over the peer-peer network.
What are the features of blockchain?
Different elements help blockchain technology to work seamlessly. And they are; Smart contracts, Immutable records, Distributed ledger, Decentralised, Transparency, Unanimous, Secure, Speed, Consensus, and a host of others.
In this article we will only be discussing three key features;
- Smart contracts
- Immutable records
- Distributed ledger
Smart contracts
These are a set of rules that can restrict transactions until the rules are adhered to then transactions can move freely.
An example of a smart contract is when a client hires a freelancer on Upwork and goes on to follow the terms and conditions guiding the hiring of a freelancer.
The client adheres to the guidelines and transfers the deposit for payment to the freelancer. The deposit doesn’t leave the platform until the timeline fixed for the project elapses and the freelancer finishes the project.
When the timeline has elapsed it does not matter if the client is online or not the deposit will be released to the freelancer.
Immutable records
Records in a blockchain are impenetrable, they cannot be altered unless the majority of individuals in the peer-peer networks authorize it.
This makes it impossible for hackers to get through because they would have to change the digital signature of all the blocks.
This high-level security builds a strong relationship of trust and security between the networks.
Distributed ledger
Every member of the peer-peer network has a copy of the ledger. Whenever there’s a change in the ledger all the other members will be notified and they can see these changes being made.
This brings about trust and transparency in these transactions because nothing can be manipulated without the whole network being aware of this change.
Benefits of Blockchain technology;
Decentralized Structure; This means that blockchain technology has no central authority. Which in turn means that it answers to no one. Blockchain technology just has several nodes that help verify transactions.
These nodes can be easily accessed through the web and this makes it open for anyone to access the information.
A lot of people believe that you can only store cryptocurrency transactions on a blockchain but you can store other information like; Contracts, Valuable documents, and Assets.
High-end Security; The information on a blockchain cannot be hacked into because they all have unique digital identities.
Now because these blocks of information are linked together by chains, if you’re going to alter them you’d have to change the digital identities of all the blocks which are impossible to do.
The information on a blockchain is also encrypted which adds an extra layer of protection to this information.
Reduced Cost; Blockchain technology has been able to reduce third-party charges from transactions.
Now business owners can carry out transactions without unnecessary third-party charges that can cause a huge loss to their businesses.
Less Failure; With blockchain technology, there is no room for human errors. Everything is very organized and up to date without human complications.
Control Of Data; Users of blockchain technology have easy access to their information. These users can decide who sees their information anytime they, please.
Traceability; Because of the unique digital identity of every piece of information in a blockchain its origin can be easily traced. This is able to reduce the number of fraudulent activities carried out by hackers or thieves.
Speed; Because there are no third parties and unnecessary procedures the transactions in a blockchain are much faster. Although some factors too can contribute to the speed like network traffic.
A typical blockchain transaction is supposed to be completed in seconds. The maximum time is 10 minutes and it is considered secure information after just a few hours.
Confidentiality; Information stored in a blockchain can be made public but the personal information of the individuals cannot be accessed by anyone except the individual.
Types of blockchain technology
There are four types of blockchain technology.
- Private Blockchain
- Public Blockchain
- Consortium Blockchain
- Permissioned Blockchain
Private Blockchain; This kind of Blockchain is authorized by one individual. This is mostly used by private corporations and businesses, this is not a blockchain that allows access to every network.
Public Blockchain; This is the opposite of a private blockchain because instead of it being only accessed by a single user it is duplicated and sent to other peer-peer networks. This is where Bitcoin and other cryptocurrencies originated.
Permissioned Blockchain(Hybrid Blockchain); As the name implies this is a private blockchain that allows only certain individuals permission to access the transaction or information on the blockchain.
This is ideal for business owners because when carrying out transactions with different individuals it’s easier to give authorization to whichever individual or network you choose without mixing up networks.
Consortium Blockchain; Now here is a combination of public and private elements. As the name implies multiple organizations will handle a single network.
This is the best blockchain for multiple collaborations with different organizations.
Industries that use blockchain technology
Supply Chain Industry; When goods are moved from one place to another it is easier to trace and know where they are at any particular time.
This improves transparency and reduces the rate of fraudulent activities during these movements.
For example, The Pacific Tuna Project uses blockchain to manage fishing information, exporting/importing details, and purchasing elements to track tuna fishing. This process alone reduces the problem of illegal fishing.
Food industry; Blockchain technology has helped reduce the issues of food safety. Many have suffered from food-borne diseases and it can be very difficult to track the source of these diseases because of the lack of trustworthy information.
Which will in turn lead to cross-contamination and possibly the death of many individuals.
Blockchain technology and its reliable data have made it easier to reveal the source of these issues in time to curb them before it gets out of hand.
Examples of food industries using blockchain technology are; Nestle, Unilever, and Walmart just to name a few.
Health Care Industry; Blockchain technology has been of immense help to the healthcare system. Patient records are kept safe and can be accessed quickly and easily during emergencies.
Blockchain technology has reduced the rate of errors in patient records. It has also been able to make sure that patient’s records are kept confidential and away from hackers.
The pharmaceutical industry no longer has to worry about fake medications because blockchain technology helps identify the real from the fake.
This problem is solved by Blockchain technology using supply chain management protocols where the medicine provenance can be traced. This has helped save a lot of lives.
Banking Services; A lot of transactions in the bank can be done faster and it is a lot more secure. Third-party charges have been reduced and it is much easier to handle financial records.
Real Estate; There can be a lot of back and forth when it comes to buying or selling a property so with the introduction of blockchain technology like an intelligent contract everything can be simplified.
When both parties meet the terms of the smart contract that is when the transaction can be funded.
iGaming; Blockchain technology can help provide transparency with online gambling. Digital casinos would no longer be able to manipulate the odds to their favor and players can have the ultimate anonymity when playing online.
Financial Services; A lot of individuals do not have access to financial services due to certain factors. But with blockchain technology people in developing nations have access to banking services.
They can save money, send money, and even receive money now without a physical financial institution.
They can carry out their transactions with reduced costs in charges and delay times.
Final Thoughts
With everything that has been discussed in this article, it would be gross negligence if a user’s record comes up with errors or worse missing because blockchain technology has allowed every business owner to make sure these records are kept safe.
Not only are they safe but easily accessible to authorized parties. Blockchain technology has been able to drastically reduce third-party charges and allow transactions to be completed in just minutes.
Blockchain technology should be sourced out by business owners because it has created a great improvement in the flow of transactions and record keeping.
