Today, the term “Blockchain” is repeatedly heard in different technology areas. But, what is blockchain? Blockchain was originally created to sustain a digital coin: the bitcoin. Now it is associated with cryptocurrencies and their origin.
Learn how to buy cryptocurrencies and how to trade between Bitcoins, Etherum and others in our blog post, A Beginner’s Guide to the Cryptocurrency World.
Blockchain is a distributed database between several parties that keeps unalterable records of all transactions executed on the network. Each party is a node and all blocks making up the chain have a hash of the previous block. Blocks are chronologically ordered in a chain. Thanks to that hash, each block is referenced by the block that created it. Thus, only blocks with a valid hash are introduced in the chain and replicated in all nodes. Because of this system, it is almost impossible to modify a block that has been in the chain for a certain amount of time.
Because of its reliability, blockchain’s use has been extended to different fields. The following are the most important.
The settlement between insurance companies:
- Internet of Things (IoT) and digital identity to reduce insurance costs
- Smart contracts applied to this field
A smart contract is a protocol agreement between two or more parties without relying on intermediaries but granting its correct execution.
Sharing of patient’s encrypted information through blockchain complying with data privacy regulation.
- ID could be used for compliance matters.
- Digital identity as the key of the Internet of Things (IoT).
- Blockchain enables voting systems.
- Tokenization of assets.
- Cheaper settlements.
- Traceability of transactions.
Blockchain enables timestamp and proof-of-existence and notarization of every transaction.
Blockchain could save millions by improving compliance procedures and removing duplicates between entities.
Internet of things (IoT)
- Fractional ownership.
- Property registration.
- The inclusion of objects into the payment channels.
- Blockchain enables contacts peer-to-object.
Another promising application for distributed ledger technologies such as blockchain is payments. Currently, fees are cleared and settled through trusted, central third-party intermediaries. Industry experts predict that private, allowed blockchains will gain significant volume in the payments space by 2020.
Effective governance is the key to the successful implementation and proliferation of blockchain. It allows enhancing the resilience of the system to systemic privacy and cybersecurity risks.
Financial technology start-ups are developing smart contracts for financial transactions. In this context, security and derivate regulators will need to plan an approach to regulate their use. Several regulators have already shown their intention to examine the use of blockchain technology in the financial sector. Smart contracts are attractive to regulators because they increase transaction security and reduce the risk of manipulation. On the other hand, their implementation may raise legal challenges.
Blockchain is a disruptive and emerging trend that will have a far wider impact than the Internet and World Wide Web, covering all aspects of society. It can be applied to any transaction eliminating the need for intermediaries. It allows you to create and redefine business models making them more reliable and safer. Also to reduce time on processes, to decrease frauds and costs, while increasing business efficiency.
Interest in cryptocurrencies? Learn how to buy and trade between Bitcoins, Etherum and others in our blog post, A Beginner’s Guide to the Cryptocurrency World.