What Makes Blockchain Technology Unique?
There was a time when it seemed impossible to think of a system that could deliver low transaction fees, high transfer speeds and an easy means of retrieving lost data, all while being virtually impervious to security threats. And yet, for several years, we’ve all been reaping the benefits of blockchain technology.
But what makes blockchain technology so unique? And how might it be adapted for other industries?
This article explores how blockchain is a unique technology that can be adapted to numerous industries and answers why the different features of blockchain technology are important. It’ll also provide examples of the unique ways they have been used, could be used and are changing the digital landscape.
Blockchain: A Digital Record
Blockchain began in 1991 as a storage system to secure digital data. It’s an open ledger accessible to multiple parties at once. One of the primary benefits is that it’s difficult to change the information stored without the agreement of all parties involved. Every record becomes a block that carries a unique identifying hash. By linking individual blocks into a record chain, a blockchain is formed. Cryptocurrencies, such as Bitcoin, are an example of blockchain technology in action.
Why Blockchain Fosters Trust
By helping to verify and trace multistep transactions that require verification and traceability, blockchain is a great way to foster trust. Blockchain can protect transactions and speed up data transfer processing while reducing compliance costs. It’s capable of safely managing titles and deeds and helping with contract management.
Blockchain is coming to the fore now for a reason. A recent study published by Pew Research Center showed that Americans’ trust in government is at an all-time low. With only 18% of Americans trusting the government to do what is right, the introduction of blockchain technology and applications is the perfect way to offer transparency, as blockchain-based tech allows for stakeholder participation.
Many businesses are also turning to blockchain for the same reason; the protection, accountability and collaboration woven into the technology make it inherently trustworthy.
Why Blockchain is Considered to be So Safe
Blockchain is theoretically tamperproof, which is one reason it’s considered to be so trustworthy. Each block has its own unique cryptographic fingerprint as well as a consensus protocol; this is the process by which networked nodes agree on shared history.
That fingerprint is known as a hash and requires a lot of computing energy and time to generate. That means the miner (blockchain miners add past Bitcoin transaction data to the global Bitcoin’s public ledger) has proven they earned any blocks they add to a blockchain, as they would have had to complete the required computational work. That’s why Bitcoin is called a ‘proof-of-work’ protocol.
Since you would need to generate a new hash to alter the block, it acts as a safety seal. Additionally, hashes serve as links in blockchains, with each block also containing the hash from the previous block. This means you can’t retroactively change entries in a ledger because you’d have to create a new hash for the block you’re changing and for every subsequent block in the chain. As nodes can add new blocks to the chain at any time, you not only have to generate these new hashes, you have to do it faster than the nodes can add new blocks.
To do that, you’d need to have computers that were more powerful than all the remaining nodes together. Even if you do have enough computer power, the blocks you add will conflict with existing ones, and your alterations will be rejected by other nodes.
Why is a Decentralized System Better?
There are several advantages to a decentralized system over one that is centralized. Firstly, users don’t need to place their trust in any kind of central authority. There’s also a lower chance of a single point of failure and less chance of censorship. Finally, there’s potential for alignment in network ownership, while decentralized networks are often more meritocratic.
How Blocks in the Chain Work and What It Means
Transactional data, such as shared ledgers, permissions, smart contracts, currencies or a consensus, are stored in blocks. Multiple blocks are linked together to form a chain. As the number of stored transactions (or blocks) grows, so does the blockchain. Each block records and confirms the sequence and time of transactions. The blockchain contains all this logged information stored within a discrete network. That network has various participants, or users, who agree on a series of rules that govern the network.
Blocks in the chain work by storing the data relevant to a specific transaction. That block is then linked to the block containing the data on the previous transaction. When the next transaction occurs, it forms the next blog in the chain. The data within each block remains self-contained; however, the links between blocks and the chain they form mean that all the data is bound to its original form and sequence.
Thanks to the distinct hash contained in every block, which acts like a digital fingerprint, the hash of the previous block in the chain and the fact that recent valid transactions are timestamped, the chain is locked.
That means it’s impossible to add an extra block between two linked blocks in the chain. This is what makes blockchain technology so unique.
How Blockchain Technology Can Be Adapted to Different Industries
The potential of blockchain to effectively organize data has led to the technology becoming increasingly available across various industries. The simple premise behind blockchain, the safe storage of data, makes it highly adaptable to multiple industries.
The creation of a digital ledger that can be shared easily but is simultaneously highly trustworthy has a lot of potential, not only in the business sphere but also in public services. Law enforcement and security companies, for example, can easily benefit from blockchain-based tech used to ensure video and other data entered into evidence is genuine and hasn’t been tampered with. Similarly, blockchain can be used to allow individuals to take ownership of their own identity and manage it through a global ID that’s available for multiple purposes.
Content ownership and licensing, SAAS companies, messaging apps, travel, mobility and even real estate all need the storage of data that can be safely locked in a specific state and cannot be modified without the consent of all stakeholders.
What is an Advantage of Using Blockchain Technology?
There are many advantages to using blockchain technology. As it supports immutability, blockchain-recorded data cannot be replaced or erased. This effectively makes data tampering within a blockchain network impossible.
Blockchain is also decentralized, meaning it’s possible for any member of a network can verify data and record it into the blockchain. In addition, blockchain technology isn’t subjected to censorship as it’s not under the control of any one entity. This means no authority, including any government bodies, is able to interrupt network operations.
Finally, blockchain allows for the creation of irreversible audit trails, making it easy to trace any change over the network.
How to Use Blockchain Technology
There are multiple blockchain applications and many uses of blockchain technology. The original concept that drove the development of the tech — finance — is still a great way to use it. You can easily reduce the costs and time involved in money transfers compared to your existing transfer services for money.
Taking Advantage of Smart Contracts
If you’re a lender, you can also use blockchain to execute loans centrally via smart contracts. By using smart contracts that are built on blockchain tech, you allow particular events to trigger things automatically, such as service payments, full loan repayments or the release of collateral. The use of smart contracts also gives you greater transparency.
Beyond that, you can use smart contracts to prevent duplicate entries into your system. This is particularly useful if, for example, you sell insurance and want to prevent people from making duplicate claims for a single event.
Cutting Down on Paperwork
Businesses with huge amounts of paperwork, like real estate agents, can use blockchain technology to keep records of transactions. These can then easily be used to verify ownership and financial information or transfer titles and deeds to new owners.
Safe Storage of Personal Data
On a personal level, if your data is stored on a public ledger based on blockchain technology, you have a far more efficient way of storing your date of birth, social security number, insurance information and other key details that are susceptible to hacks on the systems they’re currently stored in. And, once information on personal identity is stored on a blockchain, we’ll be able to use a blockchain application to vote. The use of blockchain technology could potentially be used to ensure nobody can double vote, that nobody ineligible votes and that there is no way to tamper with votes once they have been placed. It also can increase access to voting, as anyone could theoretically vote from their smartphone.
Once you start using blockchain technology, all these potential uses are easier to instigate. jSign uses blockchain to ensure our electronic signatures are backed by a highly protected system. The last thing anyone wants when using a signature service is to question the safety and integrity of the system. When you’re using jSign you can rest assured each action taken on your documents is timestamped and logged using blockchain, helping to prevent false signatures, fraud, and other forms of tampering.
Getting Started with Blockchain Technology
Blockchain technology is rapidly on the rise in a range of industries, from business and finance to law, medicine, real estate and beyond. If you’re looking for ways to implement blockchain in your business, a signature system backed by blockchain is a great way to begin. Get in touch today to find out how switching to jSign can improve your efficiency and open the door to a wide range of new and exciting ways to take advantage of blockchain applications.
