It’s no secret that Blockchain technology powers some of the world’s most famous cryptocurrencies; the most prominent being the great exercise in speculation that is Bitcoin. This association hasn’t always has a positive effect on Blockchain’s image in the business world however, as a quick glance at Bitcoin’s price graph over the past 2 years reveals more peaks and troughs than you’d find on the latest roller-coaster at Disney World.
The emotional volatility of Bitcoin has turned some initially curious minds towards skeptical thoughts, and some already skeptical thoughts into complete disinterest. It is more than possible that blockchain’s reputation has been unfairly caught up in the crossfire here, despite it being the foundation for what some are describing as a financial revolution.
The line between Blockchain and Cryptocurrencies can be drawn with a quick example; if there is a problem with your Microsoft OneDrive or Google Docs, you’re probably not going to swear off Cloud-based services for the rest of your life. It’s the application causing you the problem, not the infrastructure that supports it - and so it goes with Cryptocurrency and Blockchain.
Blockchain’s purpose, in its most simple form, is to provide tracking and definition for the ownership of digital assets. It is designed to be fast, cheap, transparent and incredibly secure for all involved parties while providing the ability to exchange assets without the need to trust each other.
The relevance of two parties being able to exchange assets without the requirement to trust each other really can not be overstated. This removes the need for a middle-man service which inherently adds time, cost, complications and an additional point-of-failure to almost every company’s day-to-day operation.
A Blockchain network is decentralised and approves transactions by consensus, allowing independent nodes on the network to police their peers, resulting in no central power being able to control or dictate its operation. The nodes that power the network are compensated for the correct processing of blocks of data into the chain while being penalised for slow or incorrect work.
All transactions on the network are recorded in a freely distributed, immutable ledger that can not be retroactively changed. This provides an unrivaled level of transparency for past transactions while making it extremely difficult for records to be cheated or falsified.
The transaction data itself is transformed into a hash, and then encrypted with a cypher via asymmetric-cryptography before being sent across the network - ensuring a high level of digital security with only the target of the transaction being able to unencrypt the data.
Blockchain provides a wealth of utility for almost every business sector but it still faces some issues, particularly around integration and ease-of-use. The ability to transfer assets between separate blockchains still doesn’t have a widely credible solution making interoperability difficult. Interacting and interfacing with the blockchain, and blockchain wallets where assets are stored, is still a few steps away from being practical for the majority of people as well.
The potential for the technology is huge but perhaps not quite ready for wide-spread adoption just yet, but with that being said - we’re certainly not far away.
© CONTEXT 2020