The term Blockchain has been mentioned so often in the past few years, that there is almost not a single person that haven’t heard about it. But what is blockchain anyway? – It is exactly that – a chain of blocks, just not in the material meaning of those words. In reality, the “block” is the digital information and the “chain” is the public database where this information is stored. Each of these blocks has their own hash which is a set of characters derived from the content in the block.
Once we have this blockchain, this database is distributed at multiple computers at the same time. Nobody manages the database, but everyone in its network has access to it and has to own a special cryptographic key in order to add a new block. However, the blockchain is designed in a way that nobody can change the blocks to the ledger which prevents any type of manipulations by faking transactions or documents.
Blockchain technologies and applications
Having this in mind, it is easy to conclude that this technology is independent, transparent and secure. For that reason, companies from many different industries decide to use it. They benefit from the cost reduction, transaction transparency and data security. Here you can read more about different use cases of the blockchain.
The cryptocurrency Bitcoin is the most popular representation of use cases of Blockchain. Bitcoin in reality is a digital currency without a central bank that can be sent or transferred from user to user without the need of any sort of intermediaries. As it doesn’t require any validation by a government or a bank the process of transaction goes very smoothly. Both parties – the sender and receiver have a public and a private key that provide a digital signature which is a proof of ownership and a reference point for them. As soon as this process is complete, the transaction with the digital signature and timestamp is broadcasted to the nodes of the network for a validation and the final step is transfer of the block to the blockchain.
This world of cryptocurrencies was created as a result of the conceptualization of the distributed blockchain by Satoshi Nakamato back in 2008.
Blockchain finds its way in finance and this might be the best use case, especially in asset tokenization in financial and real assets. With the help of the blockchain technology, the illiquid assets can be converted into its tokenized form and this eliminates the lengthy process of clearing and settlement through third parties. In this way, retail investors can have access to investments, something that has been possible for institutional investors only. This allows for an asset to be freely traded on a global marketplace.
The possibility of having one single key that can be matched against an immutable ledger allows creation of a digital ID that can collect online information about a user’s identity. Information such as medical records, social security number or social media credentials can be stored on the blockchain where they are secure. If users have a digital identity they can have access to financial services which will allow them to be part of the global economy.
This area is closely connected to the digital identity. The healthcare industry can have a great use of the blockchain in a way that all the information about the current state of health that each patient has, can be stored on a ledger as a transaction with a time stamped audit trail. The access to this information will be encrypted which secures patient’s healthcare information and makes the data management much easier. Furthermore, the patients will have more control over their health data.
Since its main purpose is data storage, it is logical to conclude that the blockchain has a great impact in this area. Even though at the moment, the cloud data storage is mostly used and is a great solution for storing data, it seems that blockchain becomes a great threat to it. The idea of decentralization of blockchain storage gives the opportunity to allow its user to save on bandwidth because the files are stored and downloaded from multiple nodes and not from a single server.
If you weren’t sure what blockchain means and how different industries would benefit from it, these use cases probably helped you realize that in the future this technology would be essential part of every area, so maybe you should consider getting some use of it.
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