To thrive in this rapidly changing & globally competitive environment, businesses have no option but to be agile, resilient & innovative. This calls for digitalization of the processes which has been accelerated by COVID-19 & Industry 4.0.
The key challenge to digitalization is Data Security & Transparency. To address these challenges Blockchain has emerged as a possible antidote to one of today’s most vexing online business challenges — how to create greater trust, transparency and accountability for all who wish to transact and interact online.
- Understanding Blockchain Technology
- Why use Blockchain?
- How does it work?
- What are the opportunities?
- When to use Blockchain?
In 2008, Satoshi Nakamoto (An Anonymous person/persons), first generated and implemented the first blockchain database as a infrastructure for the bitcoin, the first cryptocurrency ever created.
- Satoshi Nakamoto used ‘block’ and ‘chain’ separately in his paper in October 2008
- Later with time, it became a single word ‘blockchain’
- From 2014 onward ‘blockchain 2.0’ is the term being referred to new applications of blockchain.
Industry 4.0, the cause of the fusion of physical and the virtual world has come much forward around the type of technology which have come up around advanced robotics, 3D printing, IOT, Artificial intelligence, big data etc.
They are the key technologies around, but the problem we have now when we talk of technology which most of us are using like robotics or data analytics, they have improved the convenience speed and efficiency certainly. But the key thing which we are suffering in the technology is the time of transit from between the transaction and settlement, we have all the best technologies around now-a-days but the time cycle is very long it's more of a linear path then there's a duplication of efforts. For example, If you have 40 or 50 players involved in the whole supply chain each one is maintaining his own ledger then which one is the truth nobody knows it and if information is all centralized and the centralized data can be changed around so the trust is gone anybody can hack into the centralized system that's the way they lack the trust and the data security.
We are moving toward digital era but people are having worrisome the more we become digital anybody can hack our data so the concept of blockchain basically avoid those issues around, this is how the blockchain come if you look in this the technology enablers which have come from industry 4.0 like IOT, robotic process, 3d printing, augmented reality, cloud, AI, cyber security of which we all are aware, but the cyber security is not serving the purpose around in many places so the blockchain which is overriding you can see it's a new way of securing a trust transferring the values and storing the data the new way means it is not centralized information. Today when I am having 50 or 60 people in the whole supply chain and every information if it is particularly dealing with funds is going to the bank if anything else is going to some other servers and those servers are centralized so anybody can hack and change it but the moment the blockchain concepts come it's a more of a distributed concept so it's not a centralized a decentralized database and the moment it is decentralized it's not easy to change so that's how the blockchain is coming into our industry.
In the simplest terms, Blockchain can be described as a data structure that holds transactional records and while ensuring security, transparency, and decentralization. You can also think of it as a chain or records stored in the forms of blocks which are controlled by no single authority. A blockchain is a distributed ledger that is completely open to any and everyone on the network. Once an information is stored on a blockchain, it is extremely difficult to change or alter it.
What does it mean to be decentralized?
Traditional ledgers are centralized - use 3rd parties and middlemen to approve/record transactions Blockchain distributes ledgers across network or participating node – no central authority required similar to peer-to-peer torrent file sharing.
At its core, blockchain brings together an ecosystem of partners who all choose to collaborate to address inefficiency. There are 4 tenants of the technology that everyone needs to understand:
- Shared, Immutable Visibility
- Privacy: Blockchain Technology leverages years of research and development in cryptography.
- Smart Contracts: Blockchain smart contracts are not legal documents so don’t think of it that way.
- Trust/Consensus: Here again, Blockchain leverages cryptography. When an event is published to the ledger, the algorithms do a couple of things. First, the identity of the participant publishing the transaction is validated by other participants.
Blockchain owes its name to the way it stores transaction data – in blocks that are linked together to form a chain. Each block contains a hash (a digital fingerprint or unique identifier), timestamped batches of recent valid transactions, and the hash of the previous block.
In a nutshell, here’s how blockchain allows transactions to take place:
- A blockchain network makes use of public and private keys so as to make a digital signature ensuring security and consent.
- Once the authentication is ensured through these keys, the necessity for authorization arises.
- Blockchain allows participants of the network to perform mathematical verification and reach a consensus to agree on any particular value.
- While making a transfer, the sender uses their private key and announces the transaction information over the network. A block is made containing information like digital signature, timestamp, and therefore the receiver’s public key.
- This block of data is broadcasted through the network and therefore the validation process starts.
- Miners all over the network start solving the mathematical puzzle related to the transaction in order to process it. Solving this puzzle requires the miners to take a position their computing power.
- Upon solving the puzzle first, the miner receives rewards within the sort of bitcoins. Such quite problems is mentioned as proof-of-work mathematical problems.
- Once the bulk of nodes within the network come to a consensus and comply with a standard solution, the block is time stamped and added to the prevailing blockchain. This block can contain anything from money to data to messages.
- After the new block is added to the chain, the prevailing copies of blockchain are updated for all the nodes on the network.
Proof Of Work
Proof of work (PoW) describes a system that requires a not-insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, such as sending spam emails or launching denial of service attacks. The concept was subsequently adapted to securing digital money by Hal Finney in 2004 through the idea of "reusable proof of work" using the SHA-256 hashing algorithm.
Proof Of Stake
Proof-of-stake (PoS) reduces the amount of computational work needed to verify blocks and transactions that keep the blockchain, and thus a cryptocurrency, secure. Proof-of-stake changes the way blocks are verified using the machines of coin owners. The owners offer their coins as collateral for the chance to validate blocks. Coin owners with staked coins become "validators."
First of all, it reduces operational costs. The removal of intermediaries may be a boon for business because it not only reduces cost but also reduces the purpose of contact — improving efficiency and growth.
Transactions speeds also are improved to a replacement height. For businesses, it's all about efficiency if they will keep their accuracy intact. The use-cases also are in favor of business. Some companies have already shown their interest in blockchain. The Dubai Blockchain Strategy is one example, The Dubai Blockchain Strategy will help Dubai to be the first city fully powered by Blockchain and make Dubai the happiest city on earth. The strategy will be using three strategic pillars: government efficiency, industry creation, and international leadership.
Several industries like Unilever, Walmart, Visa, etc. use blockchain technology and have gained benefits in transparency, security, and traceability. Considering the benefits blockchain offers, it will revolutionize and redefine many sectors.
Here are the top 5 prominent industries that will be disrupted by blockchain technology in the near future:
- Cyber Security
- Supply Chain Management
This leads us to the end of our article “Demystifying Blockchain Technology”.
Blockchain is undoubtedly important to our society. It’s an impact on the current industries. It is unparalleled. With the growth of BaaS and other improvements, it is the only time when most of the industry will start adopting blockchain.
So, what do you think about blockchain? Do you see the benefits?