The introduction of the Blockchain concept in 2008 has revolutionized the way businesses manage and share data. Blockchain technology allows the transactions of data without the need for trust or for a central authority. This technology has been proven to work efficiently and effectively and businesses have started to adopt this method in managing and exchanging data. “If widely implemented, Blockchain could transform the way society interacts not only in financial transactions, but in day-to-day life; just as the internet brought about instant digital communication, the Blockchain can bring near instant and secure digital asset transfer and movement.”
What is a blockchain?
A blockchain is a distributed ledger technology (DLT) in which transactions between two parties are efficiently recorded in a verifiable and permanent way. The blockchain database is not stored in a single location and information is shared amongst everyone participating in the blockchain. Transactions are recorded as blocks with time stamps, and is added onto the chain, hence the name blockchain. A block contains data that can be programmed to represent anything ranging from money to business contracts.
Image: Financial Times
Advantages of Blockchain Technology
Durability and Reliability
The design of blockchain ensures that every transaction is ensured to be safe and secure. There is no single point of failure from which records or digital assets can be exploited. Everyone in the blockchain essentially owns the same information. To alter the information on the blockchain would require a huge amount of computing power, making it highly unlikely.
Blockchains are designed so that records of transactions cannot be deleted or manipulated. Changes made to the blockchain are publicly viewed by all parties involved in the blockchain. Information exists amongst everyone and everyone can see and verify these transactions.
Faster, Simpler, Cheaper Transactions
Because transactions are verified by everyone on the blockchain network, blockchain technology removes the need for a trusted third party. Therefore transactions go through one less party, reducing the time and complexity of the transaction. The removal of a third-party also reduces the cost of transaction fees. “Goldman Sachs believes that blockchain technology holds great potential especially to optimize clearing and settlements, and could represent global savings of up to $6bn per year.”