The many use cases of blockchain technology
You’ve certainly heard the term blockchain before. It’s been discussed with increasing frequency, particularly when crypto is concerned. However, what it means exactly can be a little more elusive. While the technology has been growing and developing over the past few years, it is still not mainstream and therefore probably not typically talked about in your social circles. However, it is one of the most intriguing and exciting developments in tech, so you should stay updated. It’s important to learn not only what blockchain is, but also what its uses are and how it can help you improve your life.
What is blockchain?
In simple terms, blockchain is a type of shared database that stores data in blocks. These blocks are linked via cryptography, and as new data comes in, it is entered into a fresh block. All this information is stored in chronological order. In the case of decentralized-type networks, the data entered is immutable. This means that it cannot be deleted or modified, and, in the case of transactions, it means that all deals are final. If a mistake has occurred, the only way to get your money back is for the recipient to return it willingly in the context of a different transaction.
This aspect is a vital characteristic of the blockchain and the reason why it is included in DLT, the acronym for distributed ledger technology. Blockchain is the cornerstone of systems that keep information that should be carefully stored and distributed, but not edited. While the technology has gained recognition as part of the system that fueled the rise of cryptocurrencies on the market, the blockchain wasn’t invented in the late 2000s. The idea was first proposed in the early 90s, 1991 to be precise. Research scientists Stuart Haber and W. Scott Stornetta wanted to design a system that would allow for documents to be time-stamped so that they could not be tampered with.
There are some advantages that blockchain offers over traditional networks. Transparency is one of the key factors. For example, if a hacker were to extract crypto, this digital money would be traceable via the place where they were moved, or where they were spent. However, this doesn’t mean that everything is out there, for everyone to view at any time. All records stored in the blockchain are encrypted, meaning that you can keep your anonymity at the same time. Due to this reason, coupled with the decentralized nature of the blockchain which means that no third parties are in control or have access to your information, the blockchain is generally considered to be safer than traditional networks.
How is it used?
While knowing about blockchain in theory is good, the technology has real, pragmatic uses in the real world that could be useful to you. The most common use is as the backbone of e-money such as Ethereum. All transactions you make, whether buying or selling, are recorded in the blockchain. While you need a wallet to conduct any type of transaction, this doesn’t work in the traditional sense and doesn’t store your crypto. Rather, it contains the keys that provide you with access to your digital currency on the network. If you’re thinking about investing, you should seek an exchange service that can provide you with the values of Ethereum price today, so you stay at the top of your trading game. ETH is subject to some of the same volatility as other e-coin, albeit to a lesser extent given Ethereum’s reputation and years spent on the crypto market.
The more people are investing in crypto, the more widespread the blockchain becomes. While many people wouldn’t think about paying for goods and services with digital money, this is slowly changing, with an increasing number of companies and enterprises expanding their services to include purchasing with e-money. Well-known companies such as PayPal, Microsoft and Starbucks are among them, but there are other, smaller companies that you can try if you like to support local businesses.
Banking is one of the better-known uses as well. The blockchain allows for DeFi, decentralized finance, meaning that the transactions are not subjected to the scrutiny of a third-party authority. Beyond crypto however, the blockchain can also be used to process transactions in fiat currency. The advantage is that the transaction is processed faster and more efficiently. The blockchain verifies it quicker than other financial institutions, as it isn’t bound by normal business hours. It is also more accurate, as any deal is verified through multiple nodes. If only one notices a mistake, the others are alerted to catch the error.
Smart contacts are an innovation that is only possible due to the blockchain. While the tech is still in its incipient stages, it holds much potential for future development and integration within different areas. For instance, it can mean the automation of legal contracts, which means the implication of outside parties would be minimized and, perhaps in time, completely eliminated. Payment for goods would also become more easily accessible, as the necessary amount can be released instantaneously, after the prior agreement and specifications made between the seller and buyer.
Supply chains are another area that needs blockchain’s help, given how the logistics there include a lot of information, particularly when goods are transported across the world. Traditional forms of data storage are often poorly-equipped to trace the source of any issue that may occur anywhere in the chain, but a decentralized system makes it easier to monitor the journey of goods from manufacturing to usage. So, the next time you open a package sent from the other side of the globe, you may just have to thank blockchain for helping it arrive safely to you.
There are other proposed uses for the blockchain, including voting. Given how the network is known for being virtually fraud-proof, it might mean that voters will never have to worry about the integrity of their vote being protected even after they’ve cast it into the ballot. With all this to take into account, it seems clear that blockchain technology is bound to change both the virtual and the real world as we know them. There are still hurdles to overcome, but for those who see the potential, the future is already here.