If you are reading this article, you have probably heard of blockchain. Being one of the most popular technologies today, blockchain has long been here. However, its full potential was recognized only recently, particularly because of digitalization and the COVID-19 pandemic.
Every business now has to move online, depending on apps and websites, to stay relevant in the long term. Now users are looking for secure, fast, stable, and efficient software products to simplify their lives. As a result, companies need to consider using the latest technologies to meet customers’ needs. And of these technologies is blockchain ledger.
We created this guide to help you explore blockchain, its benefits and how it can be used by your business to boost processes, and how blockchain application development services give you a competitive advantage in the challenging market.
What Is a Blockchain?
Before moving to benefits, let’s first learn what blockchain means. It is a term used to describe a distributed database (also known as a ledger) that is shared among the nodes of a network of thousands of computers. As a ledger, a blockchain can store information in a digital format. Even though blockchain is mostly known for its role in cryptocurrency systems, where it helps maintain a secure and decentralized record of transactions, this technology is now used for much more purposes.
The main difference between a regular database and a blockchain is how the information is structured. A blockchain ledger keeps data together in groups, which are called blocks, responsible for holding sets of information. Each block contains certain storage capacities, so once they are filled, they are closed and linked to the previous block. This is why blockchain is named like this – all blocks create a data chain. Once new data arrives, it creates a new block that will then also be added to the chain when filled.
What are Blockchain Benefits?
Accuracy of the Chain
As we mentioned, blockchain keeps information in a network that is approved by thousands of computers. This helps to remove any human mistakes and involvement in the verification process, which leads to a more accurate record of information. And in the case where a network makes a programming mistake, the error would only appear in one copy of the blockchain. For that error to reach all the blockchains, it would need to be made by over half of all the network’s computers, which is almost impossible.
Cost Reductions
In traditional finances, users have to pay a fee for banks to verify and perform a transaction. In fact, we live in a world where we need to pay fees for almost everything where people are involved, including signing a document or performing a marriage. Since blockchain does not involve humans in the process, there are no fees needed for humans. Even though blockchain has its own costs for transactions, final costs are usually smaller than traditional finances.
Decentralization
The key idea behind the blockchain ledger is that it does not store any data in a central location. This technology copies and spreads all information across a network of computers. When a new block is added to the network and chain, every computer on the network updates the ledger to reflect the change. In the process of spreading data across the chain instead of storing it in one central database, blockchain technology becomes more difficult to hack. And if one piece of information is in the hacker’s hands, the entire network won’t be compromised.
Efficient Transactions
Transactions in traditional finances usually take up to a few days to settle. For example, if you performed the transaction on Friday, the money will reach the receiver only on Monday morning. While banks work only during specific hours, the blockchain ledger works 24 hours a day. In fact, it works even during weekends and 365 days a year, reducing the need for waiting. As a result, transactions can be efficiently done almost immediately and can be considered secure within a few hours. That is because transactions happen with no humans involved, being automated by smart contracts.
Private Transactions
Many blockchain ledgers operate as public databases. This gives anyone an opportunity to view a list of the network’s transaction history. Even though users are able to access all details about transactions easily, they won’t be able to get any information identifying users making those transactions. Although most people believe that blockchain networks like bitcoin are anonymous, the truth is that they are only confidential.
Secure Transactions
There are issues in traditional banking related to fraud. However, transactions in blockchain are highly secure. That is because whenever every transaction happens, its security and authenticity are always verified by the blockchain network. This verification process involves a network of computers based on the blockchain ledger rush to guarantee that the details of the transaction are correct.
Once the computer has verified the transaction, it is added to the blockchain block. Each block on the chain has its own unique hash while also containing the unique hash of the block before it. Once the information on any block is modified or changed in any way, that block’s hashcode changes though the hash code on the block after it would be the same. This makes it incredibly hard for data on the blockchain to be modified without any notice.
Transparency
One of the key benefits of a blockchain ledger is transparency. Most modern ledgers are entirely open-source software. Therefore, any interested party can easily review the code. This also allows any person and auditors to review cryptocurrencies for security. Blockchain does not have any real authority or someone responsible for controlling cryptocurrencies code or how it is edited. Thanks to this, anyone will be able to suggest changes or upgrades to the network. Blockchain is controlled by its user community, so when most users agree that the new version of the code sounds valuable, only then can it be done.
