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Blockchain Technology – Key Features, Application, Pros, and Cons
Blockchain technology is a breakthrough innovation that facilitates collaboration and the exchange of information between business networks. It first came into public view in 2009, around the time when Bitcoin had just been invented.
One significant feature of blockchain is that it prevents unauthorised transactions or entries in the system and facilitates the transparent sharing of information.
What is Blockchain Technology?
Blockchain technology is an intelligent database system that enables transparent information sharing inside a company network. Data is kept in blocks connected in a chain and stored in a blockchain database. The data remains chronologically consistent since it can only delete or amend the chain with network consensus.
Blockchain technology is used to track orders, payments, accounts, and other transactions. The built-in security features of the blockchain system guard against illegal transaction entries and maintain consistency in the shared view of these transactions.
Key Features Of Blockchain Technology
Since you now have a basic idea of blockchain technology, let’s go through its main features to understand how it functions.
Transparency through decentralisation
In the context of blockchain, decentralisation refers to the transfer of power and responsibility from a centralised entity (an individual, an organisation, or a group) to a dispersed network. Transparency in decentralised blockchain networks allows teams not to be worried about trusting one another. These networks prevent users from changing the data in any of the blocks since the others could easily notice the change.
Transactions are Immutable
Transactions in a blockchain are immutable, and they cannot be modified or changed. Once a transaction has been entered into the shared ledger, no other participant can alter it. For example, suppose a transaction record contains an error. In that case, you must add a new transaction to correct the issue, and it will be visible to the network.
Smart Contracts
Coding helps enforce smart contracts. Smart contracts are computer programs that carry out a transaction strictly as coded. Smart contracts automatically run when specific criteria are met since they are stored in the blockchain.
Public Key Cryptography
Blockchain employs public key cryptography to identify each network member individually. Members of the network receive two sets of keys. One key is a public key shared by everyone in the network, while the other is a private one that is particular to each member.
Consensus for Modification
The blockchain system creates guidelines that permit members to record new transactions or modify existing ones with their consent. Changes or new transactions can only be done through this system when most participants consent to changes.
Applications Of Blockchain Technology
Blockchain technology is used by different industries for various purposes. Mentioned below are some of the industries which use blockchain technology.
Banking
Blockchain technology can efficiently manage many complicated processes in banks’ core banking services. Some examples of processes that can be integrated are real-time financial document verification, simplified credit forecasts, real-time asset management, and regulatory control enforcement. Thanks to this technology, issuance and settlement times have gone down.
Supply Chain
When specific criteria are satisfied, businesses may track goods and make payments using a combination of IOT and Blockchain technology. Smart container use can alert companies about lower inventory levels. Blockchain allows authentication and recording of each step.
Media and Entertainment
Since copyright verification is essential for the equitable payment of artists, several businesses manage copyright data using blockchain technology. Through the use of this technology, real-time and transparent royalty distribution may be guaranteed.
Healthcare
Hospitals, diagnostic centres, pharmacies, and doctors employ blockchain technology to protect patient data. It has a significant impact on how clinical studies handle deceit. Data efficiency in healthcare is made possible by this technology.
Food
The use of blockchain allows food manufacturers to track a product’s journey from its inception to every point along the way before delivery. However, if the products are ever compromised, the source of the contamination can be quickly identified thanks to this approach.
Pros Of Blockchain Technology
Now let us examine the most important blockchain advantages and the reasons why organisations and individuals are keen to implement the technology.
Transparency
Due to the decentralised nature of blockchain technology, any network user can validate any data entered into the blockchain. As a result, the public can have faith in the network.
Faster Transactions
Blockchain allows for far faster transaction processing than traditional institutions. As a result, businesses that use blockchain instead of banks can significantly reduce costs.
Lowers Fraud
The benefits of blockchain technology make it perfect for companies looking to reduce forgeries. Any attempt to make duplicate transactions is impossible because it records every action. For example, your bank can only accept funds once it has confirmed your transaction.
Censorship
Since no single entity has influence over blockchain technology, it is uncensored. As a result, no central authority, including governments, is able to stop the network from working.
Seamless Integration
Blockchain enables easy external network integration with existing systems. Blockchain as a Service (BaaS) and blockchain application platforms are two methods that can be used for seamless integration.
Cons Of Blockchain Technology
Although blockchain technology provides many benefits to organisations, there are some disadvantages of the technology. Mentioned below are some of its cons.
High Cost of Implementation
In comparison to a conventional database, blockchain is more expensive. Businesses must also properly design and carry out the integration of blockchain into their workflow.
Scalability
Fewer transactions can be processed per second with blockchain technology. It is significantly slower than traditional databases.
Difficult to Modify Data
Data that has already been recorded using blockchain technology cannot be easily changed, and to do so, all of the blocks’ codes must be rewritten, which takes both money and time.
Closing Thoughts
Blockchain technology enhances business relationships by assisting parties in automating procedures, authenticating, and accurately recording transactions. Less litigation and paperwork consequently result in happier clients and a whole new level of conducting business. Blockchain technology is revolutionising how firms conduct business by offering the high level of security and trust that everyday transactions demand.
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