The rise of internet usage has brought around lots of benefits: cool new technologies, increased accessibility, and even more information at our fingertips. But as more and more people use and trust the internet with daily functions, cyber threats are also becoming increasingly common.
When it comes to financial information, your privacy and security are even more important. After all, we’re used to doing practically everything online, from account management to transfers and everything in between. And that’s where blockchain technology has come into the picture over recent years, providing users with safe and protected ways to both send money and track transactions without fear of scams or losing their money.
In this article, we’ll explore the basics of blockchain technology, how it came to be, and how it’s contributing to a safer and more secure internet experience for users.
What is Blockchain Technology?
You’ve definitely heard “blockchain” tossed around in recent years and might have conflated it with cryptocurrencies, but it’s quite different. Blockchain technology is a database mechanism that allows transparent information sharing within a business network, storing data in blocks that link to form a chain. Makes sense, right? Don’t worry; we’ll break it down even further:
Its setup makes it nearly impossible to change, hack, or cheat the system
It’s managed by multiple participants, meaning it’s decentralized and not at risk of one party having full control over the information
It uses distributed ledger technology (DLT)
What is distributed ledger technology?
Distributed ledger technology provides a special protection for transactions, meaning transactions are recorded with an immutable cryptographic signature called a hash. The properties of DLTs are as follows:
Programmable: blockchain technology is programmable, meaning it can be used for a variety of purposes
Secure: all records are individually encrypted, meaning they’re uniquely identifiable
Distributed: to ensure complete transparency, all network participants have a copy of the ledger
Immutable: all records cannot be changed and are irreversible
Anonymous: participants maintain anonymity in the blockchain
Unanimous: the validity of the records are universally agreed upon by all participants
Time-stamped: all information, including the time, are recorded on the block
Why is blockchain technology important?
As we mentioned earlier, blockchain technology provides additional security and trust to user transactions, in addition to being totally online and easily accessible. We can group the main benefits of blockchain technology into five areas:
Better security: information on blockchain is encrypted end-to-end and immutable, meaning it’s completely protected and can’t be altered, shielding your transactions from fraud and/or unauthorized activity. In addition, blockchain technology is anonymous, meaning your personal information isn’t linked to your transactions, further protecting you. Lastly, the blockchain is stored across a network of computers and servers, not just one, meaning hackers aren’t able to access the data.
Enhanced transparency: ever worry about sending money to a company and later have them change some sort of information regarding the charge? With blockchain technology, you can rest easy knowing that all participants can see the same information at all times and that information is unchangeable, guaranteeing that fraud is impossible.
Immediate traceability: this brings two benefits: one, customers can see the transaction’s history through every single step, allowing them to see exactly what’s going on. Second, this helps reveal areas for improvement in the entire buying process for companies, shedding light on where there are unneeded delays or issues to be resolved.
Increased efficiency: you already know that internet-powered processes are much quicker, and that’s because tasks that are traditionally delegated to humans can be completed much faster by computers and eliminate the risk of human error. And maybe most importantly, because all data is in one, third-party location, there’s no risk of different parties having varying records.
Better automation: we know that one of technology’s best selling points is its ability to complete repetitive tasks in just seconds; blockchain technology can eliminate unnecessary human intervention, learning the steps and next processes to automatically push transactions to the next step and speed up the entire process.
Now that you know what blockchain technology is and why it’s so valuable, let’s explore how companies are using blockchain technology to revolutionize security and transparency in today’s digital age.
Real Life Examples of Blockchain Technology
We get it–blockchain technology is relatively new and it can be tough to fully understand how it’s useful in the real world. Are companies actually adopting the technology? Or are they sticking to traditional methods? Let’s explore:
Government: governments want to show their citizens that all processes are both secure and efficient, avoiding unnecessary delays when it comes to immigration, taxes, or social services.
Healthcare: data breaches have severe consequences in healthcare, where patient information needs to be securely stored but also shared with other providers, not to mention the value of using anonymous patient data to see what’s worked in the past. Through blockchain technology, patient details are secure and can be safely shared to various providers.
Finance: banking is one area that has significantly sped up in recent years and blockchain technology plays a major role in that; it can eliminate long and tedious paperwork processes, providing clients with secure ways to set up accounts, apply for loans, trade, and carry out regular banking transactions.
Insurance: when it comes to the insurance industry, blockchain technology helps eliminate fraud or abuse while simultaneously streamlining insurance processes and automating repetitive tasks like claim settlement.
The future of blockchain technology
Many industries have adopted blockchain technology already, but the future is bright for those that will start using it more and more in the future. Overall, blockchain technology will increase visibility and tracking in sectors like transportation and food services, bringing much more transparency to the entire process. And on a general level across many sectors, blockchain technology will provide much more clarity and transparency to customers, allowing them to see the entire business process and where their money is going.
At Ironhack, we know that blockchain technology will continue to evolve and improve, providing companies worldwide with new ways to protect and track their data and processes. If you don’t want to be left behind, what are you waiting for? There’s never been a better time to dive into tech and be on the forefront of this change yourself.