Blockchain was firstly introduced by Satoshi Nakamoto in 2008. Over the years, the design system continued to be improved. It grew to become a primary functionality of bitcoin, a well-known cryptocurrency.
Cryptocurrencies such as bitcoin have grown rapidly since they were introduced. With this fast growth, the financial technology system rose to become the beginning of the application of blockchain technology.
- 1 Population estimates
- 2 Transaction Knowledge
- 3 How Blockchain System Operates
- 4 Types of Blockchain Networks
- 5 Private Blockchain Networks
- 6 Public Blockchain Networks
- 7 Hybrid Blockchain Networks
- 8 Consortium Blockchain
- 9 Application of Blockchain
- 10 Banking and Finance
- 11 Healthcare Sector
- 12 Smart Contracts
- 13 Elections/ Voting
- 14 Benefits of Blockchain
- 15 Trustworthiness
- 16 Time and Cost Savings
- 17 Security
- 18 Disadvantages of Blockchain
- 19 Technology Cost
- 20 Conclusion
Over 82 million people use bitcoins and other cryptocurrencies, according to estimates. That makes it the most widely used application of blockchain technology.
In blockchain technology, transactions are recorded in a digital record system, and this information is distributed over a secure network. Land and assets can be transferred onto the blockchain as a transaction.
Every transaction made on this channel is protected through a digital signature. This process eliminates the use of third parties to process online transactions.
Blockchain technology does not rely on a central system. Rather, the data is spread over a global network of computers that have access to Blockchain.
There are many types of blockchain engineering systems in existence. Examples are private blockchains. They are structured to meet the needs of a specific group of people and access to this network is controlled.
Additionally, the blockchain system provides a permanent record of transactions that cannot be altered and thereby providing transparency of transactions for the benefit of everyone involved.
Blockchain systems offer a possibility to change archaic modes of business operations. This system also opens opportunities for wealth creation.
How Blockchain System Operates
It is not news that companies around the globe are now utilizing blockchain for their operations. However, it is important to understand how this system works. Blockchain combines three leading technologies.
- Cryptographic keys
- Peer to peer network
- A means of computing storage for transactions and records of the system’s network
A cryptographic key consists of two keys, i.e. a private key and a public key. They facilitate smooth transactions between two parties.
Keys are kept by each party and used for referencing secure digital identity. This identity is also known as a digital signature and is usually used in transaction authorization.
The digital signature identity is joined together with the peer-to-peer network and parties who serve as authority use the signature to conclude transactions.
As soon as a deal is approved by the authorities, it goes through a mathematical process of verification, resulting in a secured transaction between both parties.
Types of Blockchain Networks
Currently, there are four types of blockchains as listed below.
Private Blockchain Networks
These are operated on closed system networks and are useful for private companies and organizations.
Among other matters of security, they use private blockchains to design preferences on accessibility and authorization of transactions. A private blockchain network is managed by only one authority.
Public Blockchain Networks
These networks can eliminate issues like security breaches and centralization. Most major cryptocurrencies use public blockchain and play roles in making Distributed Ledger Technology well known.
With this Ledger, data is distributed among a peer-to-peer network. An algorithm is used to verify the authenticity of the information.
Hybrid Blockchain Networks
Businesses use this category of blockchain to enable a useful structure when delegating who can use the network, and for specific transactions. This network gives access to specially authorized individuals only.
Consortium blockchains are similar to hybrid blockchains. This type of blockchain can be complex to set up and use, but they come with more security and are best for teaming up with multiple companies.
Application of Blockchain
Currently, there are more than 15000 cryptocurrency systems using blockchain technology. Blockchain has become a trusted way of storing transaction data. Several modern companies have integrated blockchain into their financial operations.
For product companies, blockchain enables these companies to be able to track the movement coverage of their products. Companies can track who comes in contact with their products.
Banking and Finance
The banking and finance industry enjoys a lot of benefits from applying blockchain to their business operations.
The ideal scenario is for banks and financial institutions to operate in full during business hours. Sometimes, the transactions take hours and days to complete successfully.
This is due to the huge volume of transactions being carried out per time. The blockchain, however, can speed up these processes by allowing transactions to take place at any time of day.
As a result of the incorporation of blockchain into banking processes, transactions are completed in minutes and can be processed at any time. Funds are also transferred securely. This results in lower risks for customers and the bank.
The healthcare sector is not left out in the application of blockchain. Healthcare personnel can use blockchain to store patients’ medical records securely.
The security of blockchain allows patients to trust the confidentiality and accuracy of their records. Information can be stored used using a private key, and accessibility to this key is restricted to certain verified individuals.
A computer code that can be merged into a blockchain to verify a contact is referred to as a smart contract. The contractor and client operate using terms and conditions agreeable to both parties. This can be achieved using blockchain technology.
With the development of blockchain, voting systems can now be implemented. Using blockchain technology in the voting process has proven to reduce election fraud.
The blockchain system prevents voters from being tampered with and ensures transparency in the voting process. Using blockchain, results are provided faster than when it is done manually.
Benefits of Blockchain
Blockchain transactions promote trust. Companies have come to rely on blockchain transactions for major transactions.
Since there is no central server, all transactions are secure. Additionally, blockchain doesn’t allow for unauthorized access due to its structure.
Time and Cost Savings
A blockchain system reduces transaction costs by eliminating the need for third parties. Settlements and transactions are processed more quickly. Participants in a transaction have access to a shared ledger.
The blockchain engineering system is designed to protect users against fraudulent transactions and cybercrime.
Disadvantages of Blockchain
Blockchain and cryptography use public and private keys in their operations. There have been reported issues with private keys. In a situation where a user forfeits their private keys, retrieving them is difficult, thereby posing a challenge.
Also, it is difficult to alter a transaction or change information after it has been recorded. This poses another major disadvantage of blockchain.
Blockchain technology is not free, although it helps to save users and businesses costs on transactions. The system which the network uses to verify transactions uses a large amount of computational power.
There are many applications of blockchain technology being explored and integrated. By using blockchain, businesses can be more secure and faster.
Companies must hop on this technology to improve their operations because the future proves to witness more growth for blockchain technology.
Author: Ibukun Akanbi