Read this article so that you understand the reasons why using blockchain networks is getting more popular in the past decade!
You have probably heard a little bit about blockchain before, have you? Blockchain technology has been in all news around the world in the past decade.
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As we speak, system integrators are applying to and integrating blockchain technology into many different business sectors and different industries. Examples for this include, but are not limited to: Logistics, Transport and/or the energy sector.
What is blockchain?
Let’s take a step back, and zoom out of all the buzz around blockchains in order to understand what blockchain actually is.
The blockchain is a simple digital platform for recording and verifying transactions so that other people can’t erase them later — and anyone can see them.
(2015) Gizmodo: What’s the Blockchain, and Why Does Bitcoin Depend On It?
For the tech-savvy amongst us, a blockchain is a pseudonymous peer-to-peer system that relies on cryptographic protocols as explained in our blockchain guide for beginners. It uses a public ledger and database to record all transactions.
However, it’s distributed. This means that there should, at no point in time, be a single entity existing to control said blockchain.
Furthermore, let us inspect the reasons why using blockchain networks is getting more popular in the past decade:
- Prevents scams through cryptographic proofs (Verifiable)
- Removes mediation steps – no third party involved
- Improves data availability (Redundant)
- Rewards users and businesses
Prevents scams through cryptographic proofs
Every bit of information that is saved in a blockchain is said to follow the consensus rules. These are defined by the underlying blockchain protocol. These rules often wise include cryptographic algorithms that have to be used for creating signatures of data.
If you want to verify the integrity of data or that of a specific action, you can do it with the use of cryptographic proofs. Those are publicly available as part of the blockchain network.
Cryptographic proofs are useful, for example, in the event that a stealing attempt would be setup for account Alice. Using blockchain, Alice would actually be required to give her digital consent about said action. This is because otherwise the cryptographic proof cannot be created.
Removes mediation steps – no third party involved
A blockchain network validates transactions that involve assets and/or accounts. The blockchain protocol defines the rules for validation of said transactions and blocks creation.
One of the key benefits of using blockchain is that it removes the need for involving a central authority to authorise actions performed with the underlying blockchain technology.
In the lens of a business owner, this removal of mediation steps often times results in a reduction of operational costs and also results in an optimisation of the minimum time-to-market for said business services.
Improves data availability
The fact that data integrity is verifiable, is what makes blockchain technology so attractive, in my opinion.
In fact – being proof-based systems – Bitcoin and other blockchains keep a public track of data integrity on the network. In other words, it is possible to verify the integrity of data at any point in time given access to said storage system.
Blockchains increase data availability through their redundant and distributed data storage system. Not all blockchain protocols do actually deliver on these premises, please do your own research.
Incentives: Rewards users and businesses
With distributed systems, users are given the power to store and manage assets in a blockchain network which can usually be accessed publicly over the internet.
Furthermore, users of blockchain protocols will find incentives and be rewarded for increasing the use of a blockchain. For example, the Bitcoin protocol rewards miners (e.g. Bitmain Antminer S9). Other protocols may decide to reward stakeholders and others even- have developed ways to reward the end-user.
Usage of blockchain as a technology and used as a proof-based system, has the potential to digitalise many aspects of our world economy in which the users will find incentives!
Summary
Usage of blockchain technology in the past decade has grown tremendously because of the integration into- and the applications of it with different business sectors and different industries of our world economy.
We hope that reading this article helped so that you understand the reasons why using blockchain networks is getting more popular in the past decade!
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