As blockchain has increasingly gained traction in recent years, companies and individuals are already seeing clear benefits of the technology over traditional systems. While it is impossible to outline every single benefit that this revolutionary technology offers, below we looked at 11 ways that blockchain technology is changing the world.
Advantages of utilising blockchain
Distributed power, permissionless participation
Arguably the most significant benefit of blockchain is its distributed nature. Unlike traditional systems that rely on intermediaries like banks and government agencies to verify transactions, blockchain is a peer-to-peer network.
This means that transactions can be verified and recorded by anyone on the network, making it more secure and transparent. Its distributed nature, commonly referred to as ‘decentralisation’ also means that blockchain is not controlled by any single entity, making it more resilient to attacks and less prone to fraud.
Network security
Blockchain is one of the most secure technologies available today. Each block in the blockchain is encrypted and linked to the previous block using a cryptographic hash function.
This makes it virtually impossible to tamper with or alter any information stored in the blockchain. Additionally, since the data is distributed across a network of nodes, it would require a massive amount of computational power to hack the system.
Transparency
One of the most important benefits of blockchain is its transparency. Since each transaction is recorded on a public ledger, anyone can view it at any time.
This means that there is complete transparency in the system, and users can easily verify the authenticity of any transaction. This is especially important in industries like finance, where transparency is critical to building trust and credibility.
Privacy and confidentiality
Although public blockchains publish transactions publicly, privacy and confidentiality is inherent to its design. The Bitcoin white paper explains how identity is firewalled from the blockchain.
Bitcoin handles privacy by separating identities of the two parties transacting from the transactions. For transferring monetary value, the sender needs to sign the ownership of the coins using a private key and in the same transaction, the receiver’s public key is associated with the transferred coins. This provides pseudonominity to the users while the ledger remains transparent and auditable. Additionally, the immutability of the ledger implies accountability.
The more data is stored on the blockchain over time, the more privacy is enhanced. With an overwhelming amount of information, it becomes difficult to sift through all the data, while access to relevant private keys can still prove certain facts.
Efficiency through trustless systems
Blockchain technology is highly efficient since it eliminates the need for intermediaries that are prone to infiltration and manipulation. Transactions can be processed much faster since they don't need to be verified by banks or other institutions. This makes it ideal for industries like finance and supply chain management, where time is of the essence.
The widely-used SSL/TLS X.509 standard digital certificates as distributed by trusted Certificate Authorities (CA) are supposed to follow strict rules for granting them.
However, the issue with this model is that the issuer can be compromised, leading to a large number of security breaches affecting many owners before any action is taken. One example is that of DigiNotar, a Dutch CA that was compromised in 2011, where the breach affected many well-known companies.
By comparison, Bitcoin tokenisation offers more control over data access than the current system and provides faster detection and alerting of breaches or attacks.
Wright posited that this would be a better system than X.509 and handling certificate revocation. He added that using Bitcoin, it is possible to establish provable ownership of data, multiple ‘subkeys’, multi-sig access to data, and pseudonymous investments that remain compliant as long as the relevant authorities are aware of the true identity behind the pseudonym.
Cost savings
Since blockchain eliminates the need for intermediaries, it can help save a lot of money. For instance, in the financial industry, banks charge significant transaction fees. With blockchain, these fees can be significantly reduced, making it cheaper and more accessible for everyone.
Traceability
Blockchain technology is ideal for supply chain management since it allows for easy tracking of goods and products. Each block in the blockchain is linked to the previous one, creating an unbreakable chain of custody. This means that each product can be traced from its origin to its final destination, making it easier to identify any issues that may arise.
Immutability
Once a transaction is recorded on the blockchain, it cannot be altered or deleted. This means that the data stored in the blockchain is immutable, providing a high level of security and trust. This is especially important in industries like healthcare, where patient data must be kept secure and private.
Smart contracts
Blockchain technology allows for the creation of smart contracts, which are self-executing contracts with the terms of the agreement written directly into code. This eliminates the need for intermediaries and reduces the potential for fraud. Smart contracts can be used in a variety of industries, including real estate, healthcare, and finance.
Elimination of fraud
Blockchain technology is ideal for eliminating fraud since each transaction is verified and recorded on a public ledger. This means that there is no room for fraud as each transaction can be traced back to its origin. This is especially important in industries like finance, where fraud can be costly and damaging.
Faster settlement times
Since blockchain eliminates the need for intermediaries, settlement times can be significantly reduced. This is especially important in industries like finance, where time is of the essence. With blockchain, settlements can be completed in a matter of minutes, rather than days or weeks.
