The term “blockchain” describes an advanced digital database mechanism that stores data in blocks. These blocks are linked together as a chain, as the name suggests. In layman’s terms, a blockchain is a set of data stored in the cloud. The databases are meant to be transparent, consistent, and decentralized. This means that the data stored within a blockchain cannot be removed or changed without agreement from the whole network of people the chain interacts with. The network with access to the data has a shared view. Whether the blockchain is used for payments, orders, or sending records, the entries are consistent for all viewers with access. Even though blockchain has been around for more than 15 years, it’s still not widely understood. So let’s dig into all things blockchain—what it is, how it’s used, and the pros and cons.
How is it used?
There are many industries that find blockchain’s immutability useful. As mentioned before, blockchain technology is utilized for payments, tracking orders, and sending records. The system is not limited to one type of transaction, and each profession or industry can use it in different ways.
Supply Chain
Supply chain companies like retail businesses use blockchain to track their orders and shipments. Moving products between the warehouse and retail stores is facilitated by many moving parts; by using blockchain technology, sellers allow participants of each step in the shipping process to update the permanent ledger that makes up the business’ blockchain. This increases efficiency of the supply chain and improves communication with customers.
Healthcare
From medical records, prescriptions, and insurance information to the development of drugs and vaccines, healthcare providers are responsible for lots of information that is important to a lot of people. By using blockchain technology as an online database, these records are easily shared between certified parties and they cannot be changed by anyone without access. This helps keep important information protected and confidential, and removes some opportunity for miscommunication.
Finance
Blockchain is used in financial departments to make payments faster and more secure. There is no middle-man to interrupt the payment process, and blockchain’s permanent ledger keeps transactions transparent, as no party can go back and change data. For example, a traditional financial system like a central bank would utilize blockchain technology to manage payments and accounts.
Education
Across institutions, blockchain technology is used to verify or recognize academic credentials such as degrees, certificates, and badges. This ledger in the cloud is used to prevent falsified academic documents and can also support funding for education grants and other projects, increasing an institution’s efficiency.
Benefits
There are many parts of blockchain technology that are desirable to those who use it. The system is transparent and works to hold everyone accountable. By keeping a permanent ledger where every change or edit is logged and recorded, data cannot be falsified and everyone with access to it will see the same information. The system is more efficient than those with a middle-man. For example, payment systems that go through a third party are not as efficient as blockchain technology. Data within the blockchain is secure and protected. This technology also facilitates digital currency without relying on a central bank; a decentralized system keeps participants in the network from exerting control over each other.
Disadvantages
Blockchain has been around for over two decades, so it can’t be considered a young technology. However, the system still has some undesirable traits that may be a result of the functionality itself rather than the newness of the product. This data system has a limited capacity to process transactions. Per second, it processes slower than some of its processing competitors. This is a result of the large computing resources blockchains require to run. Because blockchains keep a continuous log that can’t be changed after a transaction has been made, the entire log is kept and processed constantly, leading to slow computing times. There is also no compatibility between blockchains, requiring a middle-man to exchange info from one blockchain to another. Blockchains are inconsistently regulated from country to country, which causes difficulties in global companies. Additionally, the steep learning curve keeps people from fully investing. Little of blockchain technology is understood by the general public, leading to misinformation and distrust.
Public Opinion
There is lingering skepticism about crypto technology. In general, skeptics label it as a scam. To an outsider, the crypto industry seems like it came from nothing, that it spawned from this inconceivable notion in the “cloud.” The tech companies creating blockchain and Bitcoin technologies have made lots of big promises. They’ve promised that the whole system would be decentralized, that it would bring economic equality, and that they would replace all world currencies. The media has also publicized Ponzi schemes and FTX-like scams as opposed to the successes of blockchain technology. Both of these circumstances have resulted in a general mistrust by the public.
The Bottom Line
If blockchain technologies are to be used properly, the industry must make an effort to increase education and awareness of its possibilities in order to mitigate the negative press it has received and the public’s mistrust. With consistent regulation, blockchain will have the chance to finally be more widely used.
