Blockchain: Its Features and Advantages
The Features and Advantages of Blockchain
Blockchain is a new technology that has already proven its significance in numerous industries. It has the potential to do amazing things. It can provide a digital audit trail of transactions. Moreover, it can verify data integrity without relying on costly intermediaries.
However, if one attempts to utilize and assess blockchain business models. It is important to learn about what it can and cannot do.
Firstly, it is crucial to distinguish the difference of blockchain from Bitcoin. Since blockchain was introduced in 2008 alongside the digital currency, Bitcoin, the two are often being confused with another. As mentioned, Bitcoin is the digital currency while Blockchain is the technology that allows moving digital currency and/or assets by acting as a central repository of digital-based transactions.
Blockchain uses a shared, immutable ledger. It can only be accessed by members with permission. Members of the network have the ability to control what information can be seen and what actions can be taken. Experts pertain to it as a trustless network not because members and business partners do not trust each other, but because they don’t have to.
Furthermore, it is built through thousands of computers rather than a single server, making it difficult to hack. If a hacker attempts to alter some information from any of the blocks. They will have to hack all computers simultaneously which is an excruciating feat. Also, by creating unalterable records and utilizing end-to-end encryption. It helps prevent any form of unauthorized activity, including fraud.
As Blockchain uses distributed ledgers as a means to transfer assets, it allows traceability of data that are recorded identically in multiple locations and enables everyone else in the network to have the capacity to see possible changes in Block information. In addition, all recorded transactions are immutable and time- and date-stamped. Meaning, if any member of the network attempts to change a Block, the other members have the capability to detect this change and decide whether it is an authorized change that took place.
Transactions take place in less than 10 minutes compared to an average of a few days in third-party systems. Processes are efficiently streamlined. Transactions get documented and stored. Transaction details also get store. This eliminates the need for paper.
Solutions need to figure out how to scale up its capacity as the number of subscribers and transactions to be processed will increase overtime and as technology becomes more and more attractive to users.
Blockchain is promising, but it does have technical limitations and areas that are still in the current stage of development including the following:
Size and scalability
A Block can only store and contain 1MB of data — an issue in size that it is yet to develop. Moreover, Blockchain solutions need to figure out how to scale up its capacity as the number of subscribers and transactions to be processed will increase overtime and as technology becomes more and more attractive to users.
VISA can handle 56,000 transactions per second. In comparison, blockchain is limited to handling seven (7) transactions per second. This means that the higher the demand for it, the more challenging it is to digitize and transfer existing documents, objects, and processes into the blockchain.
This new technology delivered cost-saving solutions with new efficiencies. But like any other solutions, it is still under development and remains to be improvable, expandable, and augmentable. Regardless of both its issues and benefits, we cannot deny that Blockchain is a disruption that we simply need to embrace.