Importance of Blockchains
Why Is Blockchain Important?
Before we shed light on the importance of blockchain, let us invest some time in comprehending the need of blockchains in the first place. In this module, we shall also focus on the problems that are associated with blockchains and what is being done to mitigate those issues. In addition, we will also detail you about the future of blockchains.
Needs and Benefits of Blockchains
There can be hundreds of reasons for why we need blockchains, and there can be hundred further ways in which blockchains benefit us. Blockchains can be used in cloud migration, education, digital IDs, voting, data sharing, and many other sectors due to the robustness they bring to the table. With anonymity, immutability, and security being their trademark features, blockchains have carved a niche in the marketplace. Once a function/code has been locked into a blockchain and passed through the server, it cannot be manipulated. Similarly, since the code/function can’t be tampered with, results do not fluctuate. Hence, it won’t be wrong to conclude that blockchains benefit us inevitably by facilitating a sense of security.
Today, across a plethora of verticals, globally acclaimed enterprises are traversing through the applications of blockchains to disrupt, transit, and renovate traditional business models. While numerous C-suite executives are still in pursuit of the right blockchain implementation, some from their kin have been able to successfully leverage the capabilities of this top-notch technology. They are now able to revamp their revenue streams owing to many a benefit that blockchains offer, including greater transparency, enhanced security, improved trace-ability, increased efficiency and speed of transactions, and reduced operational costs. From global supply chains to financial services to healthcare, blockchain has the proclivity to revolutionize every industry. It is necessary to understand that blockchains are not just about digital currencies. There is a lot more to blockchains. Numerous startups are implementing blockchains in their business models and are doing significantly well in terms of profitability and productivity. The most stand-out features of blockchains being transparency and security, companies are relying on this buzz-technology without any haste.
Blockchain technology offers neoteric tools for authentication and authorization in the digital world. These tools preclude the requisite for multiple centralized administrators. As a result, blockchains facilitate the creation of new digital relationships. By formalizing and securing new digital relationships, the blockchain technology is well poised to create the backbone of a layer of the Internet for transactional and value-based interactions. Blockchains bring in flexibility by enabling multiple parties to write new entries into a system of records. Also, each record remains secure as it is held by many custodians. Any third-party entity can both review previous entries and record new ones. The blocks and the content within the blockchains are protected by powerful cryptography. In this way, blockchains allow a digital currency to maintain a trusted transaction network without relying on a central authority. It is for this reason that digital currencies are thought of as ‘decentralized.’ This decentralized approach makes blockchain the most secure technology ever invented, the reason why it is leveraged for conducting the most sophisticated forms of transactions.
But a few constraints do tag along with every technology. Blockchain is no exception.
So, What Are the Problems that Are Associated with Blockchains?
Few IT professionals have pointed out that blockchains have become overhyped. The available versions of the technology have certain limitations and are in ways inappropriate for many digital interactions. While we talk of building the digital backbone to the new transaction layer of the Internet, sometimes blockchains, private cryptographic keys, and cryptocurrencies should not be trusted blindly. We must never forget the fact that not only us but also hackers are getting laced with sophisticated and advanced technologies. There are multiple issues that are resonant in the blockchain space.
Blockchain has made cryptography mainstream, but this highly specialized industry is occupied with jargons. Blockchain, being a complex technology itself, makes understanding cryptocurrency way too difficult. Additionally, blockchains are not much resistant to threats as they are ‘antifragile’. They respond to attacks and grow stronger; however, in today’s marketplace, blockchains are not getting the optimum exposure that would make them strong. If a blockchain implementation is not done in a robust network with a widely distributed grid of nodes, it becomes extremely formidable for organizations to stay productive throughout.
For a blockchain to be used as a database, the information going into the database needs to be of high quality. The data stored on a blockchain is not inherently trustworthy, so events need to be recorded accurately in the first place. In addition, there is one notable security flaw in Bitcoin and other blockchains: if more than half of the computers working as nodes to service the network tell a lie, the lie will become the truth.
Considering these factors, a lot of discussion has been going on about improving the present blockchain technology. Innovators are dedicating their time and resources to mitigate the shortcomings that today’s blockchains are infused with.
Here’s How Blockchains Will Look Like in the Years to Come: Future of Blockchains
Time is steering in the forward direction, so are the developments and upgrades around the blockchain space. Major players in the financial space have been investing their resources for many years to improve the offerings of blockchains. Although the disadvantages of blockchains cannot be entirely ignored, it is not late for a new dawn in the blockchain world. All these investments have not gone in vain. The future of blockchains will offer a lot to all companies across all verticals.
The blockchain technology can be used to make cross-border payments in a much faster and cheaper way. While international remittance costs are around 20 percent generally, blockchains will allow the transfer of money at a mere remittance charge of 2 percent. Another powerful application of blockchains which is underway is ‘Smart Contracts’. A computer program basically, the Smart Contract can be used to administer all aspects of any agreement, from ideation to execution.
The most important use case of blockchains is Identity Management. In a world where users are struggling hard to manage identities on the Internet, blockchains have already demonstrated their efficacy as a game changer. Thanks to the individual verification processes that take place throughout member computers on a computer network, blockchains are well poised to offer unparalleled level of security. Also, blockchains are expected to further transform the cryptocurrency space.
Read everything about benefits and importance of Blockchain? Now, check out the best tutorial to learn Blockchain by Intellipaat and claim your certification with Blockchain Certification Course. Further check the most frequently asked Blockchain interview questions with answers.
Originally published at www.intellipaat.com on February 22, 2019.
