Blockchain Technology and its impact on Various Business Sectors

1. What is blockchain technology?

Blockchain refers to a shared database that stores information differently from a traditional database. It allows transparent and unalterable tracking of all the transactions taking place between two parties or business networks. In a blockchain database, information is stored in the form of blocks. These blocks are linked together to form a continuous chain. Nobody can break or alter this chain without the prior consent of both parties involved in the transaction. This way, it becomes an unalterable ledger to keep track of various orders, accounts, payments, or any other kind of transactions.

This system has the inbuilt capability to rule out any unauthorized transactions and create a consistent view of transaction history for all parties.

2. Significance of blockchain technology

There are several challenges that conventional database technologies pose in tracking financial transactions. Let's understand this with a simple example. In a property sale scenario, once the money has been handed over to the seller, the buyer gets the ownership. Now, both buyer and the seller record the transactions but trust can be breached and fraud can happen. The buyer can claim to have paid the money when he actually has not, similarly, the seller can claim to have not received any money even when he has been paid the amount.

To avoid such a situation, a third party is used to validate the entire transaction process. Now getting this third party involved brings vulnerability and a lot of complications. Any kind of unfair compromise by this central database could cause problems for both parties involved.

These problems do not arise in blockchain because it provides a decentralized system to record transactions that cannot be tempered. In the case of property transactions, one ledger is created for each party, and every time, a transaction is made, it gets updated on each one’s ledger individually. Any fraudulent practice in the previous transaction will lead to the destruction of the whole ledger.

Because of this kind of transparency offered by blockchain, it is becoming famous in various sectors including digital currency called bitcoin.

3. How can different industries benefit from blockchain ?

Let’s see how different sectors can utilize the potential of blockchain technology.

a. Supply chain solutions

Starting from production to reaching the customer, it takes a lot of independent players who are responsible for helping the package reach its place. Having said that, tracking and tracing the supply chain processes in a collective manner is very difficult. But blockchain serves the purpose by increasing security, lowering costs, and ensuring contract compliance by all the parties involved in the transactions

b. Identity management

Blockchain has a great role to play in identity management. Using blockchain, people can create a global ID and have ownership of their identity which can serve different purposes for them. This brings a sense of security and confidence that no other person or party can access and utilize their personal information without their permission or knowledge.

c. Software security services

Protection against cyber security breaches remains a major concern of businesses around the world. Blockchain is a great solution to have robust security features for the software.

Blockchain ensures system security by using device-to-device encryption for safer communication, authentication, and key management techniques. Blockchain also stops malicious software from polluting the system by scrutinizing the updates and installers.

d. Messaging apps

Messaging apps have become an indispensable part of our life and we depend on them daily for a lot of communication. But the danger of cybertheft and personal data theft is always a major concern for users. Blockchain allows people to not use their names, phone numbers, or IDs in order to signup at various places. Rather, they can use their crypto wallet address to sign up. This way, their messaging history, and other data stay safe through non-connected and anonymous nodes.

e. SAAS Companies

SaaS is a unique and constantly shifting industry and blockchain can offer great benefits. By Integrating blockchain, SaaS providers can use blockchain as a payment option. Process automation will be another benefit to SaaS companies.

Blockchain can streamline many operations like the billing cycles, management of payments, authentication and verification, etc. This will make transactions secure and decrease human intervention thus leading to fewer delays.

f. Banking and Finance

Fraud related to money is on the rise these days and blockchain can come up as a savior. Blockchain can facilitate faster payments at costs lower than those incurred by traditional banks. Also, distributed ledgers can contribute to real-time fund transactions and reduce operational costs.

Also, tokenizing bonds, stocks, and assets can create efficient interoperable marketplaces.

g. Shipping and logistics

Blockchain technology can open the way to scaling and more wholesomeness for the shipping and logistics industry by facilitating better trackable and transparent records without the requirement to put a centralized process in place.

h. Healthcare

Blockchain has a plethora of benefits to offer in the healthcare domain. Secure and confidential transactions of patient history, management of the supply chain in medicine, and the ability to unlock the genetic code are a few of the many benefits that Blockchain can bring to the healthcare industry.

4. Features of blockchain technology

While we understand the defining features of blockchain, which is using a distributed ledger to maintain data such that no one can alter that data, a decentralized way to store information such that no centralized authority acts as the decision maker.

Here are the top 3 features of this technology.

a. Increased capacity

This is the primary feature of blockchain technology. The most wonderful trait of blockchain is that it augments the capacity of the entire network. The reason is that a large number of computers function together and provide great power in totality than only a few devices functioning with a centralized process.

b. Higher security

There is no single point of failure in blockchain technology. As a result of this, it is way more secure than its contemporaries. Data continuously gets transferred through multiple nodes as Blockchain Functions On A Distributed Network Of Nodes. So, if one node gets hacked, it wont lead to a compromise of the integrity of the entire data.

c. Immutability

One of the major highlights of blockchain technology is the creation of immutable ledgers. A centralized database is prone to theft and breach since the dependency stays on a third-party intermediary to ensure data security.

On the other hand, blockchain makes transactions transparent and corruption-proof. The ledgers in blockchain stay in a state of forwarding momentum. Any transaction’s validity is verified by every single node and only if most of the nodes validate it, then only it is added in the ledger.

5. Why Blockchain Is Important for Businesses?

Now that the nature, features, and principles of the blockchain from a general perspective are clear, let's understand how businesses can leverage blockchain technology for their good.

The fact remains that blockchain is not easy to implement and only a team of experts can manage this. So, if a business has the desire and budget to invest in a blockchain project, it can really unleash growth opportunities for them.

As per stats, the global blockchain market will be valued at more than $20 billion in 2023, which, in itself emphasizes how rapidly blockchain is being adopted by businesses.

Blockchain can act as a boon for businesses as it eliminates intermediaries and reduces operational costs. At the same time, a reduction in points of contacts improves process efficiency and business growth.

Transaction speeds experience a whole new level of improvement with blockchain. For business, moving forward with efficiency and accuracy matters the most.

The Dubai Blockchain strategy is a great use case to understand that the importance of blockchain is being recognized and more and more business domains are adopting this technology.

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