In the last 5 years, the cryptocurrency industry has significantly shaken up the financial world.
It has provided individuals to access ever-appreciating assets with previously unseen opportunities to make passive income.
New investors have started to buy Dogecoin and similar cryptocurrencies with the hope that one day, the potential profits could help them escape the 9 to 5 grind.
However, profit is not the only benefit that blockchain has managed to bring to humanity.
As a matter of fact, it’s just a small portion of the untapped potential of this technology to disrupt all industries.
Blockchain is quickly being adopted across many sectors to improve the operation process of businesses and governments.
In this article, we take a look at the basics of blockchain technology, give you an overview of how it works and discuss whether blockchain is safe.
Then, we will focus on the benefits of decentralization and the importance it brings to various industries.
Let’s delve in!
What Is Blockchain?
Blockchain was first successfully implemented with the release of Bitcoin in 2009, to keep track of digital currency transfers on the network.
In a nutshell, it is a decentralized ledger of transaction records.
These transactions are organized in blocks of data and chained together using cryptography. Hence the name, block-chain.
This ledger is transmitted to thousands of computers simultaneously that keep an exact copy of it.
All computers hold each other accountable for the transactions of the network, verifying the veracity of the work provided by the other participants.
This allows us to create a trustless system, without the need for a trusted third party.
Is Blockchain Safe?
The main reason blockchain is considered trustless is because it doesn’t depend on a centralized body to carry on transactions.
Users can send assets to each other using a peer-to-peer system, where ownership is ensured through cryptography.
More precisely, every blockchain user disposes of two codes:
- The private key, which is used to sign transactions and spend the assets in their possession.
- The public address acts as an account where the assets are stored and sent.
Consequently, only the owner of the private key can use the assets that are on the associated public address.
Moreover, the ledger of transaction records is entirely transparent.
This is in contrast to financial institutions which keep all transactions secret.
On blockchains, anyone can consult the ledger, which increases the trust between parties.
And finally, because there are so many computers that act as validators, the data is impossible to modify without proper consensus.
This makes it inherently resistant to both fraud and external attacks, as it doesn’t present a single point of failure.
Smart Contracts As The Next Natural Evolution Of Blockchain
With that said, if blockchain was merely used as a transaction vessel for digital currencies, it would not be considered a revolutionary technology.
However, the Ethereum network introduced one of the most important evolutions of this tech – smart contracts.
This revolutionary update to blockchain has helped the price of Ethereum skyrocket during the 2017 bullish market.
Smart contracts allow us to create decentralized applications that can be deployed on the blockchain.
Using these self-executing programs, developers can create proprietary cryptocurrencies, non-fungible tokens, and software that runs on blockchain technology.
More importantly, smart contracts allow us to automate vital processes in various industries.
That way, we can reduce the risk of human error and streamline the operations for businesses in sectors such as healthcare, logistics, pharmacy, entertainment, insurances, and many more.
Application Of Blockchain In Various Industries
By using NFTs, smart contracts allow us to represent anything of value on the blockchain.
This has helped the blockchain industry improve numerous industries, including:
- Healthcare – patients can enjoy full ownership of their medical records on the blockchain. Consequently, they can easily share them with the medical professionals that are involved in the caring process. As a result, we can achieve a greater level of interoperability between healthcare facilities, insurances, and patients. Ultimately, this leads to a more streamlined medical process, less prone to human error, and more cost-effective.
- Logistics – data tracking is one of the major issues in the supply chain business. Thanks to blockchain technology and by pairing it up with IoT devices, every item in the production chain can be recorded and tracked from beginning to end of the supply process.
- Finances – decentralized finances – or DeFi, is one of the main applications of blockchain and smart contracts to this day. DeFi projects provide traditional financial instruments to individuals such as lending or borrowing, without the need of a financial institution.
Blockchain is a revolutionary technology that brought us Bitcoin, cryptocurrencies, and smart contracts.
However, there are still some challenges on the way.
Some of its applications aren’t practical just yet because of scaling issues.
As such, we will need to wait for the tech to evolve so that we see more businesses adopting it as a default solution.
That said, the awareness of the trustless environment blockchain brings to the masses is increasing every day.
People are becoming increasingly aware of its benefits, and we are bound to see this technology grow exponentially in the upcoming years.