The Importance and Benefits of Blockchain TechnologyAugust 21, 2022
What is blockchain?
A blockchain is a growing list of records, called blocks, that are linked together using cryptography . Each block contains a cryptographic hash of the previous block, a timestamp , and transaction data (generally represented as a Merkle tree ). The timestamp proves that the transaction data existed when the block was published in order to get into its hash. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.
This trust is built on blockchain’s enhanced security, greater transparency, and instant traceability. Beyond matters of trust, blockchain delivers even more business benefits, including cost savings from increased speed, efficiency, and automation. By greatly reducing paperwork and errors, blockchain significantly reduces overhead and transaction costs and reduces or eliminates the need for third parties or middlemen to verify transactions.
Five important blockchain benefits
Your data is sensitive and crucial, and blockchain can significantly change how your critical information is viewed. By creating a record that can’t be altered and is encrypted end-to-end, blockchain helps prevent fraud and unauthorized activity. Privacy issues can also be addressed on blockchain by anonymizing personal data and using permissions to prevent access. Information is stored across a network of computers rather than a single server, making it difficult for hackers to view data.
Without blockchain, each organization has to keep a separate database. Because blockchain uses a distributed ledger, transactions and data are recorded identically in multiple locations. All network participants with permission access see the same information at the same time, providing full transparency. All transactions are immutably recorded, and are time- and date-stamped. This enables members to view the entire history of a transaction and virtually eliminates any opportunity for fraud.
Blockchain creates an audit trail that documents the provenance of an asset at every step on its journey. In industries where consumers are concerned about environmental or human rights issues surrounding a product — or an industry troubled by counterfeiting and fraud — this helps provide the proof. With blockchain, it is possible to share data about provenance directly with customers. Traceability data can also expose weaknesses in any supply chain — where goods might sit on a loading dock awaiting transit.
Increased efficiency and speed
Traditional paper-heavy processes are time-consuming, prone to human error, and often require third-party mediation. By streamlining these processes with blockchain, transactions can be completed faster and more efficiently. Documentation can be stored on the blockchain along with transaction details, eliminating the need to exchange paper. There’s no need to reconcile multiple ledgers, so clearing and settlement can be much faster.
Transactions can even be automated with “smart contracts,” which increase your efficiency and speed the process even further. Once pre-specified conditions are met, the next step in the transaction or process is automatically triggered. Smart contracts reduce human intervention as well as reliance on third parties to verify that the terms of a contract have been met. In insurance, for example, once a customer has provided all necessary documentation to file a claim, the claim can automatically be settled and paid.
Learn more about smart contracts →
How industries benefit from blockchain
Blockchain benefits supply chains and food chain
Building trust between trading partners, providing end-to-end visibility, streamlining processes, and resolving issues faster with blockchain all add up to stronger, more resilient supply chains and better business relationships. Plus, participants can act sooner in the event of disruptions. In the food industry, blockchain can help ensure food safety and freshness, and reduce waste. In the event of contamination, food can be traced back to its source in seconds rather than days.
Learn about blockchain for supply chains
Banking and financial industry blockchain benefits
When financial institutions replace old processes and paperwork with blockchain, the benefits include removing friction and delays and increasing operational efficiencies across the industry, including global trade, trade finance, clearing and settlement, consumer banking, lending, and other transactions.
Learn about blockchain for financial services
Healthcare blockchain benefits
In an industry troubled by data breaches, blockchain can help healthcare improve security for patient data while making it easier to share records across providers, payers, and researchers. Control over access remains in the hands of the patient, increasing trust.
Learn about blockchain in healthcare
Pharmaceutical blockchain benefits
As pharmaceutical products move through the supply chain, every action is recorded. The resulting audit trail means an item can be traced from origin to pharmacy or retailer, helping to prevent counterfeiting and enabling manufacturers to locate a recalled product in seconds.
Learn about blockchain in life sciences
Government blockchain benefits
Blockchain can help governments work smarter and innovate faster. Secure sharing of data between citizens and agencies can increase trust while providing an immutable audit trail for regulatory compliance, contract management, identity management, and citizen services.
See blockchain at work for the government
Insurance blockchain benefits
Insurance companies are using blockchain and smart contracts to automate manual and paper-intensive processes such as underwriting and claims settlement, increasing speed and efficiency, and reducing costs. Blockchain’s faster, verifiable data exchanges help reduce fraud and abuse.
Learn more about blockchain and insurance
Cybersecurity blockchain benefits
Cyberattacks are the top threat to our digital world. Look what happened to our data when Equifax announced its gigantic data breach in 2017 that affected 143 billion consumers – we went crazy. Blockchain technology can end such nightmares. It can secure our data against unauthorized access and tampering.
Because blockchain is a decentralized system, it’s ideal for environments where high security is involved. Here, all the information stored on a bitcoin or other blockchain network is verified and encrypted using a cryptographic algorithm – which leads to no SINGLE point of entry for a wide-scale attack. Also, you can easily identify malicious data attacks with blockchain due to peer-to-peer connections, where data cannot be altered or tampered with. And, by eliminating a central authority, blockchain provides a secure and transparent way of recording transactions without disclosing private information to anyone. One example of a company successfully using cybersecurity this way is Guardtime. Because of its success, we expect that many companies will follow, further disrupting this industry, too.
Transportation blockchain benefits
Utilizing blockchain technology enables traceability in the transportation industry, where the shipment of goods can be easily tracked.
Cloud storage blockchain benefits
Storj is a decentralized blockchain cloud storage system. By eliminating servers, Storj uses blockchain to store data in the cloud. With high speed and low cost, users can earn money by sharing their storage space on Storj.
Real estate blockchain benefits
Deploying blockchain technology in real estate increases the speed of the conveyance process and eliminates the need for money exchanges. Let’s not forget that it can revolutionize the title deed systems and procedures. No more land grabbing as once a land has been sold. This data remains permanently on the blockchain and hence can’t be forged or manipulated.
Identity and credential blockchain benefits
Identification and credentials are easier for everyone to work with when they’re digital: vaccination cards, academic qualifications, occupational licenses, employee ID, and more. But this highly personal information must remain private and secure.
Governments, businesses, and educational institutions can turn to the blockchain as a proven way to enable a secure and trusted infrastructure and improve services.
With blockchain technology, information about identity is auditable, traceable, and verifiable — in just seconds. Individuals can curate their own profiles and control data sharing. Issuers easily connect with others and provide nearly instant verification of credentials. All participants are empowered by a platform anchored in trust.
Blockchain technology can power new models for change, advancing knowledge and helping social organizations create shared systems of record. It is already revolutionizing industries and even creating new ones. Individuals, Organizations, and Governments are adopting this new technology because of how it makes processes efficient, secure, immutable, and transparent.
And that’s it for today.
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