Blockchain continues to exceed all expectations, but what is it, and what does it mean for the future of money and business?
How does Blockchain work?
Blockchain is a virtual and decentralized ledger that records transactions in a transparent and secure way across a global cloud computing ecosystem of computers known as nodes. Transactions need not be limited to payment and other financial information, such as the location and value of cryptocurrency, but to things like medical records and voting records too.
A block itself is an immutable digital record that is linked together in a single decentralized list, hence the term blockchain. Each transaction is validated by multiple computers connected to the internet and monitored by the system in the form of a peer-to-peer network. The distributed nature of the network means that no single system can add invalid blocks to the chain.
A relatively simple analogy is the way Google Docs works. When you create a new document and share it with a group of people, the document isnโt copied or transferred so that there end up being multiple copies modified simultaneously. Instead, everyone has access to exactly the same document at the same time, rather than being locked out and waiting for one individual to make changes. This distributed chain means all modifications are made in real-time, making them fully transparent in the process. This is what makes blockchain transactions practically impossible to falsify, since doing so would require physical access to an estimated 10,000 operational nodes across the network.
Blockchain use cases in information technology
The best-known use case of blockchain technology is facilitating cryptocurrency transactions, most commonly with Bitcoin. In the case of Bitcoin and other cryptocurrencies, the blockchain network ensures that no single individual or organization has control, thus cutting out the need for intermediaries like payment-processing firms and promoting better financial vitality. That said, blockchain has many other use cases, such as the following:
- Digital identities: Centralized entities are becoming increasing susceptible to attacks, such as data breaches and identity theft. Blockchain gives users far more control over their information and the way it is used.
- Healthcare: Incomplete or falsified medical records can mean the difference between sickness and health. Blockchain serves as a tamper-proof, secure database that gives practitioners a clear and full understanding of patientsโ medical histories.
- Legal: A huge portion of ownership assets remain in paper form, leaving ample room for fraudulent activity. Blockchain-based records, however, offer an immutable source of proof for legal cases.
- Voting: Voting fraud is a major issue that plagues many existing voting structures and makes online voting notoriously difficult to secure. Blockchain can eliminate concerns around voting fraud to allow people to safely vote from home.
- Supply chain management: Supply chain attacks remain a serious problem that costs the global economy millions of dollars every year. Blockchain allows companies to lock down their supply chains, unlock new business models, and manage trade finance.
What are the limitations of blockchain?
While a growing number of companies have expressed an interest in blockchain technology, challenges and limitations remain. Most of these issues revolve around reputational matters, not least because of blockchainโs common association with bad actors, such as purveyors of ransomware. Other challenges include limited interoperability with existing systems, a lack of scalability, and the fact transactions can be slow and cumbersome due to the large number of nodes involved in the network.
However, despite these problems, blockchain promises to revolutionize the world of security by enabling the use of smart, secure, and immutable contracts and transactions to ensure an automated execution without the need for intermediaries.
Hewlett Packard Enterprise is helping businesses stay ahead of the curve by facilitating digital transformation initiatives and modernizing the workplace. Contact us today to find out more.
Mashail Alhassoun
Hewlett Packard Enterprise
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Mashail-Alhason
Mashail is a Hybrid IT Presales Consultant at HPE with proven success in helping and advising customers throughout their digital transformation journey. Mashail is also passionate about new technologies and trends in the market, and driving the right use cases to achieve customer's vision.
