Blockchain has become one of those innovations that everyone talks about, but rarely anyone understands. It has even been compared with the internet and is said to change the world similarly. So, what's the deal?
What is blockchain technology?
Technically, blockchain is a database technology that stores information. On the contrary to conventional database technologies, a blockchain does not need a central entity that stores and manages the database. Instead, an identical copy of the database is distributed across an extensive network of computers.
Data stored on a blockchain is encrypted. Whenever new data is being uploaded, each copy of the database is immediately updated with the latest information. If anyone attempts to manipulate, copy, or delete data that has already been uploaded, the distributed computer-network will detect and prevent those changes.
Thus, blockchain technology enables the safe and secure storage of data, temper-proof, and without the need for one central entity to manage the database.
Why is blockchain technology revolutionary?
As blockchain does not rely on a central entity as a database safe keeper, it allows us to cut intermediaries out of the value chain. Some examples:
Banking: So far, we needed banks to manage payment transactions, asset ownership, and accounts. On a blockchain network, banks become obsolete. Accounts and payment transactions are stored on a blockchain, meaning nobody can manipulate this data, and it doesn't need a bank as a safe keeper of information anymore.
Real estate: With blockchain, if you buy a house, you won't need a bank, a custodian, or a lawyer. Instead, house ownership gets documented on a blockchain, and once it is transferred to the new owner, the payment will get deducted automatically from the purchaser's blockchain-wallet.
Healthcare: If health data were stored on a blockchain, patients could keep a digital copy of their data and share it with their healthcare provider when needed. They could also share their data safely with their insurance companies and even scientific institutions to contribute to medical research.
eCommerce: eCommerce platforms could implement blockchain-based financing and shipping operations. Once a customer orders a product, the platform automatically deducts the purchase price in digital currencies from his blockchain-based wallet. This amount is placed into an escrow wallet. Once the product is being shipped, the payment is released. On a blockchain, this entire mechanism can happen automatically, without either the seller nor the buyer taking a risk. Credit card fees will become obsolete as well.
eTrade: Export Portal is using blockchain to enable platform users to store and send critical information, such as trade documentation, financial data, and even payments. Through the use of blockchain technology, all data is secure, and users can share data in real-time and at a low cost.
Cutting intermediaries out of the value chain leads to lower transaction costs and faster transaction speed. That's why blockchain technology will become increasingly important over the next few years and has the potential to revolutionize the way we interact across all industries.