Understanding the blockchain revolution
Blockchain is the next frontier in emerging technology, and smart businesses all across Australia are keen to adopt it. But at the same time, it’s often not fully understood.
So let’s look at what blockchain actually is, and why some are considering it the biggest technological breakthrough since the internet.
So, what is blockchain?
While 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.
Think of it as a peer-to-peer network. This network of users, known as nodes, are connected via the internet, and use the network to transfer information directly between each other, without any third party intermediaries getting in the way.
These transactions of information are recorded 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 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 a 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 information of the transaction.
They key benefits of blockchain
The data contained within each block in a blockchain network data 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.
The transparency of blockchain technology means you can see and access data at every point in a transaction. So, for example, 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 the transaction occurring, this means businesses can clearly identify any errors in their processes, and fix them practically in real time. And, as blockchain is built on code, this means that businesses can create automated processes that remove the need for manual input, removing any human error, and speeding up the processes time.
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.
What is blockchain used for?
Blockchain technology opens the door to a wide range of use cases.
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.
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.
So, what is blockchain?
It’s the future of digital.
Blockchain Australia™ provides end-to-end blockchain solutions to help power your industry. Get in touch with us to discuss how our blockchain solutions can help you take the leap into adopting this exciting technology.