Blockchain: Capabilities and Features
Introduction to Blockchain Technology
Blockchain has been praised as being one of the most revolutionary technological innovations since the invention of the internet.
It’s been said that blockchain technology has the power to completely disrupt traditional banking, while also making it easier for individuals and companies to exchange money and track information in contemporary society. But what is blockchain technology, and what’s it truly capable of doing?
Blockchain technology is what keeps the Bitcoin network active. It’s the reason why Bitcoin is secure and decentralized. Every transaction that takes place on the Bitcoin network is stored in a database known as the distributed ledger.
The Bitcoin Network
Computers that help run the Bitcoin network are called nodes, and every node has an identical copy of the ledger that’s continuously updating itself.
For the network to properly run, pending transactions are compiled into blocks and distributed across the network where they’re linked to older blocks on the ledger. And since every node has their own copy of the ledger, no one central institution like a bank or governing body has the power to control transactions.
In simpler terms, blockchain is the piece of technology that sets Bitcoin apart from centralized online payment systems – but it’s also much more than just the engine that drives Bitcoin. In fact, blockchain can exist outside of the Bitcoin network, whereas Bitcoin as we know it cannot exist without blockchain.
Blockchain Beyond Bitcoin
The overwhelming success of Bitcoin has attracted a lot of mainstream attention to blockchain technology. Banks, governments, and business owners are all exploring how blockchain can be integrated into the public and private sector outside of the Bitcoin network.
While we’re just now testing the limits of what all blockchain can actually be used for in contemporary society, we know that it has the potential to completely change the way we facilitate transactions and store information. Outside of sending money electronically (like Bitcoin), blockchain technology can be used to perform the following tasks:
Secure Online Records
Because of its decentralized nature, blockchain technology can be used to manage online records more effectively than centralized database services. With centralized databases, your documents are in a central location and are more susceptible to being corrupted or accidentally deleted.
With blockchain, however, the records are distributed across an open network and updated simultaneously, making it impossible to hack or corrupt file by attacking a single location. As a result, blockchain technology prevents the likelihood of a single point of failure occurring in the system, as the network’s stability doesn’t depend on any one computer.
Broker Deals with Smart Contracts
The release of the Ethereum blockchain project in 2015 introduced a platform similar to Bitcoin, but with one major difference – smart contracts. With Ethereum, you’re able to program smart contracts to govern transactions.
When agreed upon, these contracts can’t be changed retroactively and work to ensure that both parties uphold their end of the agreement before the money actually changes hands.
Manage Digital Identities
With blockchain technology, public cryptographic keys replace the need for using personal documents to verify identity. For companies that specialize in web commerce, blockchain technology is especially useful.
It promotes security and transparency without placing parties at risk of falling victim to fraud and identity theft.
Promote Government Efficiency
Blockchain makes it possible to record money going in and out of accounts. When used in government, this increased level of transparency makes it possible to track where money is going and what it’s being spent on.
This, combined with the fact that blockchain can be used outside a centralized database, makes it almost impossible to tamper with records. As a result, blockchain can help prevent corruption and create better efficiency, as money becomes easily traced and expenses are able to be accounted for.
Make Verifiable Records of Data
Thanks to its timestamp feature, blockchain can also be used as a decentralized, digital notary. Once data is uploaded to the blockchain network, it receives a timestamp that confirms its existence at that point in time.
There are already companies that are looking into using blockchain to verify important documents, like insurance claims, medical records, and educational transcripts.
Certify Physical Items
Much like your dollar bill has a unique serial number, transactions on the blockchain also come with a unique ID that can be investigated on the distributed ledger.
This ID can be used to certify and record physical items in order to identify stolen and counterfeit merchandise more effectively.
Manage Supply Chains
Manufacturers, suppliers, and retailers can all use blockchain to track the movement of inventory between parties. Walmart is currently exploring ways to integrate blockchain technology into their supply chain to better track the movement of food, cut back on spoilage, and trace contaminated goods back to a single source.
Blockchain Outside of Bitcoin
As you can see, blockchain technology has a wide range of uses apart from Bitcoin.
As businesses and governments around the world continue to learn more about what all blockchain is truly capable of, we can expect to see it being used more frequently in our day-to-day lives as a more effective way to track and manage information.