What is blockchain, and why is it such a huge benefit to your business? Keep reading to learn more.
What Is Blockchain?
At the most basic level, blockchain is exactly what the name implies – a chain of digital blocks. Or, rather, it’s digital information stored in a public database.
The blocks in blockchain are digital pieces of information, typically transactions. For example, a block might contain the date, time, and dollar amount of your most recent Amazon purchase.
When someone records a transaction in a block, that block gets verified and added to a chain of blocks (other transactions added by users). This chain is publicly accessible to anyone with the network key, but it isn’t centralized to any institution like a bank or company.
While others can view any block in the chain (including blocks they didn’t add), they cannot change the blocks.
Benefits of Blockchain
It’s a relatively simple system, but it’s incredibly powerful in a digital world where access, security, and verification are critical. Here are three benefits that make blockchain so important.
You know that you need website security. But what if there was a way for you to guarantee security without the need for trust?
Blockchain is unique because it’s a trustless system. That is, it’s a system that doesn’t require trust to operate successfully.
When a block is added to the chain, it receives a timestamp and a link to the previous block, which in turn has its own timestamp and link, all the way back to the original block in the chain.
If a hacker wanted to change the details of a transaction in a single block, they couldn’t simply change that block. They would have to change the details on every block in the entire chain. Keep in mind that people can add blocks from anywhere in the world, anytime they feel like it, from a decentralized network of computers.
It’s not impossible to hack blockchain, but it’s so astronomically difficult as to be functionally impossible.
Imagine having the power to verify digital transactions without needing to trust any party involved.
Another massive benefit of blockchain is transparency. This is why blockchain has been suggested as a valuable tool in improving the global supply chain, particularly food supply chains.
Let’s say you’re a major retailer, like Walmart. And let’s say that in order to make a single product, you have to collect raw materials from dozens of international suppliers. The trouble is that you still have to maintain quality control for your consumers.
Blockchain eliminates the risks attached to global supply chains because it allows you to trace a product through every stage of production, even if the raw materials started out in another company’s hands. You can check every transaction that took a product into a consumer household.
Keep in mind that changing a single transaction would require a consensus to change every other transaction in the entire blockchain, which means that mistakes cannot be altered after the fact.
The net result is a more accurate, transparent, and accountable way of doing business.
Taking Charge of Your Systems
We can’t yet envision the many ways that blockchain could alter how we do business, but the possibilities are nonetheless exciting.
Looking for more ideas to maximize your systems and streamline your business? Check out our blog for more posts, like these four ways to use big data to your advantage.