Blockchain can seem complex and overwhelming. And that’s because the technology behind it is pretty advanced. For our purposes, we’re going to keep things simple.

It’s important to know that when we talk about blockchain technology, we’re not talking about one single technology. Blockchain effectively exists as the architecture that empowers users to make transactions on a digital database. 

In other words, blockchain is an electronic ledger that can be openly accessed by users. It creates unchangeable records of these transactions, and each record is time-stamped and linked to the one before it.

The blockchain database is a peer-to-peer network. The network of users, known as nodes, are connected via the internet. They use the network to transfer information directly between each other, without any third party intermediaries getting in the way.

Transactions of information are recorded in a cryptographically secured method, in packets of data—or blocks. Each block is recorded in an electronic database, or ledger, in chronological order. 
When the specific transaction associated with the data within that block is finished, the block is completed, and a unique security code (hash) is created that ties the block to the next block in the sequence. As more transactions occur, more blocks are added to the ledger, and an unbreakable chain of information is formed.

The data of these transactions is immediately replicated and distributed across the entire system, between all users connected to the network. This is why blockchain is also known as distributed ledger technology.

The transaction records within these blocks can’t be altered by any external party. They’re permanent, immutable records. The only way this information can be updated is by consensus among the users on the network, and the new data that’s entered cannot be erased.

The data within can only be read by users with access to the specific blockchain network. But to those users, this record is completely transparent, so any party with access to the ledger can see the entire history of transactions.

As the fame of Bitcoin and other digital currencies started increasing, blockchain, the technology behind it started getting noticed by the world. However, it didn’t take long for innovators to realise that the unique decentralised nature of blockchain was something that could translate to other business use cases.

“Decentralisation” describes how the collection of computers or nodes involved in a blockchain are not all under one roof. Instead, each is operated by an individual or group of individuals. Each node has a full record of all data in the blockchain, so no one individual can alter information or delete transactions. This removes any reliance on third party intermediaries. 

Because of this, we see a whole host of business benefits. For example:

• New levels of transparency in processes
• More security and less risk of fraud
• Human error is eliminated
• Sensitive data can be safely stored
• Transactions are much faster 
• Transactions are cheaper – Accenture reported that blockchain could reduce infrastructure costs for the world’s largest investment banks by 30%
• Parties can interact without knowing or trusting each other
• People can easily launch products on the blockchain

Security

Blockchain technology is addressing many of the previous issues of trust and security.

The data contained within each block is stored on computers and servers distributed all over the world, and only people on that network can access that data. For a transaction to be considered as a valid record, all nodes in the network must agree that it’s valid. So for a hacker to take control of a blockchain network, they would need to have control of at least 51% of all the computers within the network, which makes it exceedingly hard to hack.

Because blocks are stored in a linear and chronological pattern, all new blocks are added to the end of the chain. This alone makes it difficult to edit the contents of a block, unless the majority of participants have reached a consensus. Each block contains its own hash (a string of numbers and letters that represents digital information), so whenever information is edited, the hash changes too.

Efficiency

The transparency of blockchain technology means you can see and access data at every point in a transaction. So, for example, a business can track a product within their supply chain right from its raw materials, through the manufacturing process, until it’s delivered to their customer. Whatever transaction is occurring, this means businesses can clearly identify any errors in their processes, and fix them practically in real time. 

As blockchain is built on code, businesses can create automated processes that remove the need for manual input, removing any human error, and speeding up processing time. Before this, we relied on central authorities such as banks to verify transactions, which could mean a wait of a few days – and even more for cross-border trades.

Integrity of data

The transparency and traceability of blockchain enables businesses to clearly demonstrate where their products are coming from. It allows transactions to be made safely and securely between users, without any third parties getting in the way. As such, it can effectively eliminate fraud, as every action and process is documented clearly, from start to finish.

Blockchain technology opens the door to a wide range of use cases that go beyond sending and receiving funds.

Smart contracts

Smart contracts act as a coded paper contract, with predefined automated conditions that cause an action to occur when these conditions are met. This speeds up contract processes, and cuts out the need for human intervention.

Cryptocurrency

Cryptocurrencies work as a decentralised, encrypted digital currency, created on a blockchain network. They’re free of external intervention or oversight, with no central authority governing its value. Cryptocurrency can be used to buy and sell, or used to invest, like a traditional asset.

Security token offerings (STO)

The next step up from cryptocurrency, STOs act as a portion of ownership in a resource, asset, object, or company. STOs provide investors with tangible legal contracts and rights, while functioning as real financial products. STOs have the potential to commodify real-life assets, such as art, venture capital funds, and even real estate.

Non-fungible tokens

One of the more recent innovations in the blockchain space, non-fungible tokens (NFTs) enable the tokenisation of any asset or collectible – including digital art, real estate and music. NFTs prove digital ownership and can create value in the real world, making their adoption across the world fast. 

dApps & blockchain solutions

Businesses can create disruptive decentralised applications and other solutions based on blockchain platforms such as Ethererum. There is a growing number of platforms made for blockchain developers and there’s almost no limit to the type of secure, scalable application businesses can launch on the blockchain. 

For further information related to this sector, you can connect with us via  admin@jnt.asia