What is Blockchain and What are its Use Cases?
Blockchain is famous as the technology that powers cryptocurrency, particularly bitcoin. But blockchain has outgrown the realm of cryptocurrency. Now, its popularity has expanded into the area of decentralized application development. With that, the relationship of the business world with blockchain has entered a new phase. Businesses are now peculiarly eager to explore how blockchain development can deliver solutions for the practical needs of businesses.
Before discussing the business-relevant innovative use cases of Blockchain technology, let’s understand the framework of blockchain in detail.
What is Blockchain?
For maintaining the records of transactional data, businesses need to use some kind of ledger system. It can be the register copies, spreadsheets, or digital databases. In a similar context, Blockchain is a new-age ledger system that maintains the history of transactional data (records) in blocks that are then chained together in chronological order. But, the blockchain mechanism is unique in many regards.
How Blockchain Works?
To understand how blockchain works, think of a peer-to-peer network of multiple computer systems. Let’s call these systems ‘Nodes.’ Each computer or node in the blockchain network will have duplicated data, which means all the computers will have the same data. This keeps the blockchain data decentralized. No particular Node owns the blockchain.
As mentioned, data in a blockchain exists as chained blocks. To add new data (block) to the blockchain, it is obligatory to get the transaction (data) validated by the majority of nodes in the network. Even, if someone wants to update any information in an existing block, then also it has to get verified by the majority of the nodes.
The important point to note here is that once data gets stored in a blockchain it becomes immutable, which means it can’t be reversed, deleted, or tempered. So, whenever one tries to update the data of an existing block, the updated information gets stored in a new block altogether. Then that new block gets added to the chain in chronological order. Thereafter, the updated blockchain gets duplicated and distributed among all the computers in that blockchain network, and this happens in real-time.
Use Cases of Blockchain Technology
- Smart Contracts: Blockchain-based contracts are digital contracts that facilitate the transfer of sensitive information between two or more parties without involving any intermediary. It can be enforced in real-time, and can also be automated. Smart Contracts ensure the security and credibility of information.
- Internet of Things (IoT): IoT devices are vulnerable to hacking as data can be breached through a single connected device. Blockchain-based solutions like decentralized credential verification and biometric authentication can make IoT devices tamper-proof.
- Money Transfer: The most excellent use case of Blockchain is related to money transfer and payment processing. Blockchain technology is the effective and transparent solution for monitoring cryptocurrency exchanges, regulating compliance violations, identifying fraudulent transactions, controlling money laundering, and much more.
- Personal Identity Security: Major work is happening in the space of blockchain development to build solutions that can combat crimes like personal identity theft, hacking, violation of personal files, documents forging, etc. Blockchain is the ideal decentralized and immutable ledger for storing crucial personal information like social security numbers, addresses, birth certificates, PAN, etc.
- Logistics: The logistics industry struggles with the issues of data silos and poor transparency in communication. This is where the transparent record-keeping model of blockchain comes in handy, as it can validate information sources, track the information trail, and keep it secure.
- Media houses can use the blockchain to establish and validate their ownership over the content and save it against stealing.
- Blockchain is also an effective solution to record the ownership of expensive items like diamonds, cars, lands, houses, etc.
The Final Words
Blockchain ledger system is so powerful that it can’t be cheated, and this enhances trust in financial transactions and the record-keeping mechanism of the blockchain network. Also, because blockchain transactions don’t require intermediaries, so processes get more efficient, prompt, and less expensive. No surprise, businesses are interested in adopting technology like that.
Different blockchain development platforms like Ethereum, Ripple, Corda, EOS, Hyperledger Sawtooth, etc. are facilitating the hosting and development of blockchain-based software suite.