A blockchain is a shared distributed database or ledger between computer network nodes. A blockchain serves as an electronic database for storing data in digital form. The most well-known use of blockchain technology is for keeping a secure and decentralized record of transactions in cryptocurrency systems like Bitcoin. The innovation of a blockchain is that it builds trust without the necessity for a reliable third party by ensuring the fidelity and security of a record of data.
The key difference between the blockchain and a typical database is the organization of data. In a blockchain database, data and information is stored in groups and these groups are known as blocks. Each of these blocks has specific storage capacities; some of these blocks are capable of more data while others may store fewer data. When these blocks are filled, they are closed and connected with each other in form of a chain, every block is linked with its previous block and this chain of data is known as the blockchain.
Working Principle of Blockchain
The main principle behind the working of Blockchain is that it makes it possible to share and record digital information without giving a feature of editing of data. A blockchain acts as the foundation for immutable ledgers, or records of transactions that cannot be changed, removed, or destroyed. Due to this, Blockchains are also referred to as distributed ledger technologies (DLT).
Benefits of Blockchain in Business
In 2009, with the launch of bitcoin, the use of blockchain is a change from theoretical to practical purposes. This world actually knows that this technology actually works. Since then, businesses have been experimenting with how they use blockchain to enhance the growth of their business. Blockchain is being used by well-known corporations, governmental organizations, and nonprofit organizations to enhance current business processes and create new business models. Blockchain is valuable because it enables quick and secure data sharing between entities without requiring any one entity to be taking care of data security or transaction facilitation.
In fact, whether a company chooses to use a public blockchain network or chooses private blockchain-based applications, blockchain and its features can be very beneficial. Now let’s discuss the top benefits that blockchain technology can give to a business.
- Building Trust: In cases where trust is either not guaranteed or unproven, blockchain establishes trust between different entities. Because of this, these organizations are willing to do business that includes transactions or the sharing of data that they might not have done before or that would have required an intermediary. One of blockchain’s most important advantages is its ability to enable trust.
- Decentralization: According to Daniel Field, head of the blockchain at UST, a leading global provider of digital technology and services, blockchain really shows its usefulness when there isn’t a central player that facilitates trust. Blockchain thus, permits data sharing across an ecosystem of businesses where no single entity is solely in charge; in this way, different entities get a decentralized structure where participants are unfamiliar with each other and can do business in a secure way. A good example of this is the supply chain: However, no one is in charge of supporting all that information exchange.
- Cost Reduction: Blockchain technology is also efficient in reducing the cost of an organization. It enables transaction efficiency. It automates the auditing process, data organization and other paperwork related to finance. If we talk broadly, blockchain help business in reducing the cost of middleman, and other service providers for traditional work that can easily be done by blockchain.
These benefits like cost reduction, trust and decentralized structure are need of every business for successful growth. Blockchain in this way helps a business to grow in the right direction.
