About a decade ago, blockchain started rising to the top as one of the most innovative technological trends going around the globe. The technology became revolutionary due to a man named Satoshi Nakamoto, when he solidified this idea in order to establish an electronic currency, known as bitcoin. Even though it was originally used for bitcoin, people realized that the digital ledger can be used for more than just cryptocurrencies. The value placed in blockchain eventually increased due to the recognition that it can be used for many other causes.
How It Works
Blockchain got its name from--well--the fact that it’s a chain of blocks. It is a decentralized, digital and public ledger that holds all transactional data. To break it down, imagine blockchain as a Google sheet. Then imagine that Google sheet is being duplicated across everyone’s computers. And in blockchain, the computers would be called nodes, which are connected with each other through the same network.
This means that the system is decentralized, where there is no single organization that controls everything occurring in the digital ledger. The peer-to-peer (P2P) system that is established in blockchain makes the system stable and secure. Everyone has access to the ledger, making it transparent and public.
Within the Google sheet, there is information that is being duplicated across all the nodes, which would mean that every computer holds the same data. Each individual has the same copy of the same data being inputted into the system, and the data comes from each transaction or action that a person makes.
Every time a transaction or action is made in the blockchain, another block is being added into the network. However, it quickly renders until it is officially recorded in. The information provided in each transaction may contain the time the transaction was made, who received it, who sent it, and how much was transferred (if we’re talking about finances).
Advantages of Blockchain
It would be nearly impossible for people to tamper with the records because then they would have to manipulate every single record on each person’s computer. Each node has a type of unique code called a hash that can help disable people from bypassing and contains encrypted previous information of all the blocks before it. The P2P network ensures that anyone’s transactional data is safely stored.
Due to its decentralized nature, blockchain enables individuals to directly interact with each other in the network without the use of arbitrators. Generally, third-party intermediaries require certain fees for their services, such as how banks charge a fee towards customers who want to cash in a check.
Blockchain has viable use cases across a diverse range of markets. Aside from obvious applications in the financial and banking industries, the technology can improve processes in travel, insurance, energy, food, and more. With rampant food fraud across the globe, blockchain can help standardize the food supply chain and offer valuable insights on production, tracking, and sales. Its value behind security also makes blockchain essential in the travel industry; airlines can prevent breaches in booking and scheduling systems to protect personal and financial information. Smart contracts and blockchain even presents a valuable opportunity for the entire insurance industry, where underwriting and claims processes can be simplified through efficient automation and succinct data reserves.
Everyone can see the data contained in the system. Because everyone shares the same document, everyone has the ability to oversee all transaction data and see new information being inputted in. This makes the network stable and accurate.
Blockchain is changing the world as we know it, but true innovation comes in many shapes.
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