Less than a decade ago, the digital disruption led to the emergence of IoT-powered new technologies and the surfacing of Industry 2.0. As part of ICT (Information and communication tech), Blockchain or cryptocurrency is being adopted to shift from the conventional ledger system to track and conduct financial transactions.
Blockchain technology promotes a completely new structure to maintain ledgers and record generation, digitally. This technology was introduced in 2008 to make cryptocurrencies such as Bitcoin work. Blockchain is a viable encrypted digital ledger system that operates on a decentralized structure with transparency and immutability of records generated. Today’s technology is viewed as an alternative to conventional banking mechanisms for doing and keeping track of financial transactions. However, its application is being researched across business verticals.
The structure of blockchain
Blockchain is an organized, fair, and secure method. In a blockchain structure, the transaction taking place between two or more individuals or parties is inter-linked and encrypted through cryptography. A chain of blocks containing transaction records linked to the block of origin is created. This chain is transparent yet, secure via peer-to-peer encryption. The blockchain technology ensures that the transaction remains private and accessible to the individuals/parties involved.
While looking at the structure, it is evident how blockchain can prove instrumental in simplifying a digital ledger’s financial record creation and maintenance. It can play a pivotal role in large and medium IT enterprises for designing smart solutions. Blockchain technology can also become part of the network and infrastructure apparatus to increase transparency, traceability, and security.
Records and data generated in a chain can be further connected to the data centers in an enterprise. As the data generated in a blockchain will be safe from corruption, data processing will become seamless and fast. The blockchain technology works over a decentralized platform and the records are distributed, it can also help in cutting down costs by evading the third-party or intermediary involvement. Blockchain uses a time stamping process and promotes highly secure transactions, in a decentralized structure. Thus, it can be difficult to find out vulnerability at a particular node in the chain.
How is a block created
During each transaction, a block of the record is created containing hash, number string, and letters. Each transaction has its own chain of the block, without mutability. Any kind of change in the transaction chain will need permission else, a completely new blockchain is created. This set-up will enable participants of a digital transaction to only verify and secure transactions and exchange trusted information or data.
The blockchain process provides better traceability for every transaction in a highly organized environment. While its database can be autonomously managed, blockchains can be both private as well as the public.
Application of blockchain
As per Gartner, blockchain technology will empower the movement of goods worth $2 trillion by 2024. It will become the primary source for accessing encrypted digital peer-to-peer transactions. The implication of blockchain is underway across diverse business verticals. Some of the industries are keen to implement blockchain as a service (BAAS), wherein the use cases of the technology will be applied as per the business need.
For capital markets, blockchain will help in a faster clearing, auditing, and operational efficiencies, apart from making everyday transactions increasingly recognizable. The blockchain technology will make asset management, insurance claims processing, cross-dimensional payments secure, distributed, and inexpensive. It will greatly help in fighting fraud and putting an end to spurious ways to replicate known transactions. With IoT becoming the key driver for conducting business in the connected ecosystem, blockchain and its application will make each transaction simply tamper-proof.