Blockchain is among the most disruptive technologies humanity has seen in decades. It has been described as having the ability to change the world as we know it on the same scale as electricity or the Internet. Why, then, has so little of the general public heard of it? And why does blockchain deserve receiving such lofty praise?
Because blockchain has far more benefits compared to traditional data structures, it is either in experimentation or adoption phases throughout nearly every industry in the world.
Decentralization of data is one of the most major benefits of blockchain technology because of the protection it provides. With blockchain technology, data records are stored on multiple nodes across an array of geographical locations. This substantially lowers the risk of data loss due to fire, theft, natural disaster, hacks, and corrupt file systems—all risks posed by traditional data systems.
Decentralization also disperses power and control over data because no single administrator retains control of the information. Instead, nodes on the network must reach a consensus about the legitimacy of entries in order to replicate the most current data across all nodes.
As it pertains to digital currency, people in unstable political climates benefit greatly from decentralization of their funds, because it takes them out of reach of overbearing or corrupt governments who may threaten their livelihoods. Similarly, blockchain technology can lower the impact of corruption and reduce the risk of tampering in voting scenarios.
As mentioned, blockchain’s decentralized technology means that everyone on the network holds a copy of universally agreed-upon transaction records. Any subsequent changes must be accepted by the majority of the network, making collusion close to impossible.
Together, these concepts ensure the network is transparent to everyone involved and not at the whim of centralized bodies who may be tempted to alter the network. If the majority of the network does agree to make a change in order to, say, rollback an error—as in the Bitcoin overflow issue—then all users of the network are aware of this change and have willingly undergone a split in the network for good cause.
Similarly, if a malicious agent attempts to make a change to a blockchain network, the other nodes simply throw out the record if it does not pass consensus. It is next to impossible to surreptitiously alter information on a blockchain network because it is decentralized. Much of today’s digital data—including bank transaction records—reside on one or more centralized servers that disseminate data to requesters, such as a user logged into online banking.
This bottleneck becomes a target for hackers who wish to alter the information. Blockchain technology rectifies this issue by spreading the information through the entire network. This also keeps data secure from natural disasters, fire, and theft.
Because linear blockchain networks operate on an append-only basis, there is a traceable chain of data. This is especially helpful for operations like supply chain because blockchain becomes an auditable trail of every stop a product makes on its journey.
Eliminating the need for paper trails and ledger reconciliation can vastly improve efficiency and the speed of transaction processes within a business or digital currency network. Middlemen, such as banks and other central authorities, require a lot of resources overall, even if they only require minimal resources per transaction. Blockchain can also eliminate time and energy spent on updating records since replication is built into its framework. This is why governments like Dubai are utilizing blockchain for government records, decreasing paper trails and improving quality of life for its citizens.
Without the need for third-party verification and centralized bodies for trust and control, companies that utilize blockchain technology can reduce costs. Middlemen cost time as well as money. Similarly, a lower risk of security breaches and fewer squabbles over inaccurate records can save companies from losing money and time.
The state of blockchain today
Although blockchain has been gaining momentum in mainstream media, it is still a fringe technology. Many of the use cases for blockchain are only now emerging or are in experimental and early-adoption phases. Originally, blockchain gained public attention for its role in digital currency. Blockchain is the basis for many popular digital currencies, such as Ethereum and Bitcoin, because it allows users to make extremely secure, decentralized transactions.
Although blockchain has proliferated into many industries, including finance, energy, supply chain, and art it is mostly high-level professionals in tech-forward companies and blockchain enthusiasts who are aware of blockchain’s benefits. However, the word is spreading. Some companies have made it their mission to educate the general public about blockchain by focusing on blockchain projects. This is especially common in the crossover niche of blockchain and gaming. Crypto Hunt is one such company that is blending popular existing game elements—for instance, the augmented reality of Pokémon GO—with blockchain-relevant elements in order to help spread information about this technology.
We can expect blockchain to gain a wider audience as more projects come out of testing and gain exposure with the general public. For now, blockchain holds keys to the future. As Marc Andreessen puts it, “Any new technology tends to go through a 25-year adoption cycle.” Patience is crucial.