BLOCKCHAIN — and its Applications
The term ‘blockchain’ is thrown around a lot these days. However, most people only relate blockchains with cryptocurrencies. And while crypto is a major use case for blockchain networks, it is not the only application.
What is Blockchain?
Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
This digital ledger can be compared to a Google Document that is only accessible to those who have permission. Each change one makes to the ledger must be approved by the many computers — known as nodes — that comprise the chain.
Cryptocurrency and Blockchain:
The most popular application of blockchain technology is in the working of cryptocurrency. It is central to the appeal and functionality of all cryptocurrencies. In fact, the idea of a blockchain was first conceived as the mechanism supporting Bitcoin. To solve the double-spending problem associated with digital currencies, Satoshi Nakamoto devised an immutable ledger of transactions that chains together blocks of data using digital cryptography. In 1998, Satoshi Nakamoto published Bitcoin — A Peer-to-Peer Electronic Cash System, a white paper that described the blockchain network and its technology. According to him, Bitcoin was “an electronic payment system based on cryptographic proof instead of trust.” He also stated that cryptocurrency would not be possible without blockchain technology.
While blockchain might work extremely well in the field of cryptocurrency, it has many other applications that are just waiting to be explored.
Blockchain Technology in Voting
Voting is a concept that is used in almost every field, every organisation, every strata of society. In today’s voting process the voter submits their voter ID, the ID is verified, and — using the centralised Electronic Voting Machine (EVM) — the voter submits their vote. However, an EVM can easily be hacked and the vote count manipulated.
The blockchain can provide a means by which votes are issued securely, with that vote being tied to a person’s unique identification metadata. This system can streamline the process and ensure that democratic systems are put into practice in a way that overcomes the geographic and financial boundaries constraining people. Whether this means voting on the members of a board, the direction the company should take, or a CEO’s salary, the blockchain offers excellent potential for democratic voting systems across industry lines.
Such a system would automatically tally and maintain the result of such a vote, providing an uncontestable and permanent record of what conclusion was reached, for all parties to see. Since it is nigh impossible to hack into blockchain technology (hence, its appeal), there would be little scope for result tampering.
Blockchain Technology in Supply Chain Management
Supply chains are organisational and logistical systems which transport goods from a factory, extractor, or grower to the consumer. They are typically complicated systems that can span the globe. In view of the increasing import and export trades, supply chains have become even more difficult to watch over.
Most of these systems are centrally maintained independent databases. Thus, acquiring accurate information about shipments, etc. can be nearly impossible for the person tasked with supply chain management, as opacity and fragmentation can disrupt any unity throughout the links in the supply chain. Here blockchain incorporation can come into play.
Blockchain would allow all parties on a supply chain to log their information into a ledger with the proper permission. This would enable a single, secure system by which each unit in the chain — especially the overseer — could view in real time, including how the goods are being handled and processed on their way to their final destination. There can then be increased transparency while holding each stop in the supply chain accountable for lost, damaged, or fraudulent goods being introduced into the supply.
Thus, blockchain can provide permanent record-keeping, transparency and validation of transactions shared by multiple supply chain partners and anyone can verify the authenticity or status of the product being delivered. Pharmaceutical and food supply chains, where fraudulent products and disease-ridden food can corrupt an entire supply, can put this technology to great use. The ability to accurately trace the poisoned link in the supply chain could not only save on costs but potentially save lives.
Blockchain in Financial Management
Finance promises the greatest possibility for blockchain incorporation. Uses such as voting, record keeping, and more all come within the purview of financial services but the applications of blockchain range to further beyond. Cryptocurrencies have already widened our eyes as to their impact on the financial world as an investment and speculative currency. However, blockchain — the technology forming the base of crypto — can better protect data, streamline transactions (especially international ones), etc.
Many financial services firms are using Blockchain to improve back-office settlement systems, increase efficiency, and reduce costs. Banks like UBS have plans to use tokens for cross-border trades. While the Chamber of Digital Commerce was established to educate and advocate for Blockchain technology in the financial services industry and beyond. The chamber’s initiatives include the Blockchain Alliance, which aims to use it to combat criminal activity. And, the Blockchain Intellectual Property Council, which helps to balance identification transparency with protecting proprietary data.
Banks and financial firms provide loans to individuals and businesses in times of need — it is an essential facet of the financial industry. But there are inefficiencies in the structure like biases of the lender while giving out the loan, exhausting KYC processes and long waiting periods. Blockchain technology could remove these inefficiencies.
In the normal lending process, a middleman is necessary to facilitate the loan, its approval, and disbursal. But using blockchain smart contract technology, the process can be made seamless. A smart contract is a piece of code that executes itself after certain conditions within the contract are met.
The lender and seeker can agree to fair and feasible terms like proof-of-funds and payment planning using smart contracts. These contracts will then validate and record transactions without any bank or middleman, leading to a faster verification of the loan seeker and more immediate loan disbursement.
Thus, we can see that blockchain technology has widespread applications in the modern world. It is not only restricted to cryptocurrency but can be used in a plethora of fields by all sorts of businesses.
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