Little is mentioned that the technology that supports cryptocurrency goes beyond the elimination of intermediaries in virtual transactions. Below is a practical tour of the intricacies of the Blockchain and its benefits at the business level, which can be considered as future differentials.
Practical Guide for Those Who Do Not Know Anything About Blockchain
The use of this type of technology is not new and that its development was created in the very dawn of the Internet. The first work of cryptography (confidentiality using specific encrypted data) secured with a blockchain technology was advanced in 1992 by Stuart Haber and W. Scott Stornetta. They incorporated the Merkle trees, also known as a hash, into the design of data to improve efficiency in documents collected in an information block. The blockchain technology is a way to secure data without it being damaged or altered.
What is a blockchain? It is a series of links that was originally called blocking chain and functioned as a list of records in continuous growth called blocks, linked and secured by cryptography.
Now, each of the blocks mentioned usually have a hash pointer that function as a link to a previous block, transaction data, and timestamp. By design, the blockchains are intrinsically resistant to the data modification making them remain secure.
The Harvard Business Review publication on the subject describes it as: “A giant open and a distributed book that can be used for recording transactions between two parties in an efficient, verifiable and permanent manner.”
Now, a blockchain is handled by a peer network composed of companies or parties that collectively adhere to the process to validate new blocks. The information in any block can’t be changed without the modification of every subsequent block. For a modification to occur, there is the need for the collaboration of the majority of the network to which the block belongs. That is where the magic of this system lies since it is almost impossible for any of the members to modify the components of the blocks individually.
Blockchain technology is essentially a decentralized form of value exchange that transfers the trust of a third party to collective parties that are incentivized to maintain the integrity of the system (be it financial or information).
Other uses of Blockchain Technology
Now that we have an overview of how the blockchain works and its most popular application (cryptocurrencies), you can get a bit its various uses, in addition to the one mentioned.
The possibilities of blockchain are not limited to financial applications. With the option of private or public access, blockchain can be used to receive and send any valuable information. For example, this can be used in the healthcare sector where integrated delivery networks could allow hospitals, pharmacies, and insurance companies to access the complete medical history of a patient with transferred permits, including all records of the same.
There is a great potential for blockchain in the field of real estate. The physical records of the title of the land tend to show several owners and their movements are usually difficult to trace to local governments. Let’s review some specific cases.
The term ‘smart contract’ was coined for the first time in 1993, but recently it became an interesting term thanks to the publication of the Ethereum Project in 2013. The Project “is a decentralized platform that carries out a smart contract: applications that are developed exactly as they were programmed without the possibility of interference from third parties or fraud, censorship, and downtime.”
Smart contracts are computer programs that are self-automated and can meet the terms of any contract. In essence, it is a financial guarantee maintained in custody by a network that is addressed to the recipients, based on future events. Companies will be able to use ‘smart contracts’ to reduce the costs of a subset of more common financial transactions. The best thing about all this is that the contracts are unbreakable.
Companies like Slock are enabled by Ethereum, and use this application to allow customers to rent bikes.
The phrase “From the farm to your table” could become a reality by using the blockchain technology to track the production of meat at all stages of the supply chain.
Many of the largest food retailers in the world are interested in this technology since it means more efficiency for them means more profits. They also argue that it represents fresher food for the final consumer.
Several airports around the world are looking to start to use the blockchain to assist in the processing of passenger information, as does the London Airport.
The SITA travel group believes that through the use of secure individual tokens (coins), travelers can pass through airports and between borders more efficiently without the need for multiple travel documents, or with the use of biometric data which they require less personal data.
As loyalty programs proliferate in retail, travel and financial services, consumers end up with a complex network of exchange points and options which they do not use properly.
Well, that’s where companies like Qiibee and Loyal, based in San Francisco, United States, apply blockchain technology to create a platform of universal loyalty and rewards, giving consumers access to all their programs in one place and providing the ease to spend points through different schemes.
Some companies such as Provenance (a British startup) are developing platforms that use blockchain technology to track the source of raw materials in the supply chains. Provenance recently finished a project that uses blockchain to track tuna caught in Indonesia via text messages from mobile phones, sent by fishermen, to discover if they were of ethical origin and encouraged fishing without slavery.
Payments and music licenses
Blockchain could support the instantaneous and transparent transmission of artists’ royalties and allow real-time distributions to writers, producers, technology partners, and labels every time a song is played.
Blockchain And Industry 4.0
Knowing the Blockchain is of great interest to companies, which is why experts now publish articles in which they have tried to introduce the Blockchain concept.
The Internet has changed the lives of humankind. Companies such as Google, Facebook, Amazon have excelled in this field and have generated an enormous impact, thanks to the fact that they have excellently managed the information they got. As a result, companies, industries, services, and new business models have been created in new economic sectors.
A few years ago, a new concept appeared: the internet of value. It is based on the discovery of the blockchain technology and is opposed to the Internet of information in which it allows the sharing of value since it does not need a trusted Central Entity to impose its criteria. This technology will be applied to titles, certifications, files, songs, etc. It is a network articulated by the people themselves generating content without intermediaries and where everyone is a transmitter and receiver.
When talking about an industry 4.0, it refers to the digitalization of production processes in factories through information systems and sensors to produce better outcomes. It is about the communication between humans and machines in cyber-physical systems through extensive networks. Industry 4.0 will make it possible to obtain and examine different data through the machines, which will allow faster, more efficient and more flexible processes for the manufacturing of higher quality products at a lower cost.
The Objective Of The Fourth Industrial Revolution
It is the emergence of intelligent factories capable of manufacturing very small batches, even individual, of thousands of different configurations of the product at very low prices.
To achieve the objective as mentioned earlier, there will be a need for “intelligent factories” based on machine to machine (M2M) communications, Internet of Things (IoT), Artificial Intelligence (AI), 3D Printing and data will also be very important.
The Blockchain means decentralization of validity and this technology will be key in this revolution. For the IoT sensors, for example, it will mean guaranteeing the accuracy of the data transmitted by the sensors without the fear of manipulation of the registers. Recall that Blockchain technology will allow all previous records that have been saved and therefore that responsibilities can be established in case of errors. In M2M, the Blockchain technology will stop humans from intervening in the processes.
For Industry 4.0 to produce at competitive prices, the elimination of indirect costs and the disintermediation of all processes will be necessary. This way, these machines that will be producing thousands of unit products must be able to be supplied by other machines without the existence of people who have to carry out the budget-order-supply-payment. The blockchain technology will allow the machines to launch purchase offers, analyze the best offers, execute orders and make payments. All this will be done not only without personnel but directly without intermediaries.
No doubt, there is still a bit left for people to see the scenario described, but tests are already being done on many of the processes described, and some companies such as Siemens and General Electric are moving quickly so that in a short time this Industry 4.0 will turn reality.
Application of Blockchain in Industries
At the industrial level, any company can benefit from the different applications of the blockchain since this system makes the total traceability of a product from its manufacturing point until it is purchased by a final consumer possible.
Giant companies such as Daimler have already begun to work on the traceability of the product throughout their life cycle. These companies knew where each product passed in their plant, but once they left their warehouse, they had to trust what the supplier told them. Now, the industrial companies can have their suppliers register the code of each product in blockchain and add all the associated data including the corrections made by them.
The energy sector is one of the sectors in which most activity is taking place in the field of the blockchain. It is worth highlighting energy trading initiatives where a consortium is proposed at European level.
At the level of consumption or pharmacy, there are several projects in progress where the traceability capabilities of the blockchain technology are used together with the Internet of Things that allow guaranteeing and certifying the origin, either of food or medicine. This type of initiatives minimizes fraud and allows tracking of different products in the supply chain.
At the Supply Chain level, Blockchain offers benefits such as: reducing or eliminating fraud and errors, improve inventory management, minimize messaging costs, reduce paperwork delays, identify problems more quickly, and increase the confidence of consumers and partners.
What differentiates a blockchain supply chain and a normal supply chain is the consensus that must be reached among all the parties involved. Therefore, if one person says that something has changed and the other two parties do not agree, the transaction cannot be made since there was no consensus.
The Financial System
The banking sector is one of the pioneers in the implementation of this technology. The blockchain technology can serve the financial system by:
The technology allows the management of assets is thereby avoiding the role that prevails in most entities. This technology will digitize and automate internal control reports in real time with excellent and safe traceability which could end up replacing their auditors.
Carrying out cross-border transfers
The pioneers have created cryptocurrencies for institutional use to swap assets around the world quickly and safely.
Interactions with other companies
This technology goes beyond purely banking services. One of the particularities of this association is that it allows transaction beyond the money. The tokens exchanged by these companies are like chips that act as money in the casino, but they can be a reflection of all kinds of assets just as a bank will operate with money, a telecommunication company with minutes, and an oil company with liters.
Smart contract works through instant execution software, which makes them ideal for coding financial products such as bonds and mortgages.
Melissa Crooks is a Content Writer who writes for Hyperlink InfoSystem, one of the leading app development companies in New York, USA & India that holds the best team of skilled and expert app developers. She is a versatile tech writer and loves exploring the latest technology trends, entrepreneur and startup column.