How Blockchain Technology Delivers Security, Visibility, And Efficiency

Digital currency drew attention to blockchain technology. While blockchain tech runs digital currency, this method of distributed storage and processing has also been used successfully in many other kinds of applications. Some examples include real estate, insurance, building, and many other financial applications. Learn more about how blockchain works, so you can understand how it can deliver better security, visibility, and efficiency to all sorts of digital applications.

The Basics Of Blockchain Tech

Normal applications run on a computer and use a central storage repository as a database. While each of these points will get explained in more detail further down, first consider some of the basic differences with the way that blockchain applications work.

* Blockchain tech keeps distributed copies of its data, called ledgers, on multiple servers. Each of these servers is called a node.

* The distributed nodes also must handle transaction processing.

* While processing depends upon multiple servers agreeing to the legitimacy of the request, not all nodes are involved in every process.

* Nothing ever gets deleted from the blockchain. Even though updated records can be applied, it’s always possible for authorized users to view every event that has ever occurred.

How Blockchain Tech Improves Visibility

The most obvious thing about blockchain tech is the way that it improves visibility. First, it’s possible to protect these ledgers against unauthorized viewers with a secure encryption key. The fact that these ledgers are visible doesn’t mean that they also can’t be kept private. Different applications may use a private or a public blockchain installation, depending upon their need.

The reason that blockchain offers visibility is that nothing will ever get deleted from the ledgers. Even if hundreds of updates are made to a user’s records, it’s possible to trace the entire history of updates since the beginning. This feature has drawn the interest of accountants and auditors because they believe the extra visibility of the blockchain can make their work easier and more accurate.

How Blockchain Technology Improves Security

There are two main ways that blockchain technology can help improve security:

Multiple backups of data and processing: Typical systems that rely upon a central database are very vulnerable. If a digital criminal or even a natural event destroys or corrupts that database, it could be lost forever. Since blockchain tech relies upon distributed nodes to store and process the transaction, the loss of one or even a few nodes won’t cause any problems. The identical data is stored in many other nodes, and they simply keep functioning.

Multiple nodes must agree to process transactions: Also, multiple instances of the blockchain must agree upon a transaction. This greatly reduces the chance that a digital criminal could hack into a lone server and change their data. If the data doesn’t agree with other ledgers, no transactions will get processed. This offers an additional level of security over traditional computer systems.

How Blockchain Tech Works More Efficiently

Blockchain technology also helps improve efficiency in a number of ways.

With blockchain tech, there is no middleman who might regulate and slow down transactions. If regulations need to be enforced, they can actually be coded right into modern blockchain systems. The shared ledger’s visibility also builds trust into the system. This eliminates the need for third parties, so it can lower processing speeds and costs.

It’s also fair to attribute increased efficiency to improved visibility and security. Better security means that less time and money need to be spent on risk management, additional security software, and so on. Better visibility reduces auditing costs and even the chance of fraud.

An Example Of Blockchain Tech Improving Visibility, Security, And Efficiency

An apartment developer wanted a way to raise funds from multiple small investors. They developed a blockchain to offer tokens to investors. Each of these tokens represented a certain number of square feet in the project. As the project progressed, the average value of square feet in the building increased, and so did the value of the tokens.

Because the developer could offer a digital system to manage tokens, they could reduce a lot of obstacles that they might have faced raising funds. First, they didn’t have to do all of the paperwork and wait to get a loan approved by a traditional finance company. Instead, they just sold shared in the project in the form of these tokens.

Typically, investors in these kinds of a project have to commit several thousand dollars for several months to a few years. With the tokens, investors could just buy as little as one or a few dozen square feet. These tokens were also entirely liquid. The investors could wait until the project progressed, their token value increased somewhat, and then sell their investment at any time that they wanted to.

Also, the blockchain was completely visible to investors, management, and other stakeholders. Besides the tokens, it also stored reports upon the progress of the project. This gave the token holders a better chance than most investors have to make good decisions about when to buy, sell, or hold their tokens.

What’s Important To Know About Blockchain Tech?

Digital currency made blockchain technology famous; however, blockchain tech can do more than power digital currencies. These electronic currencies have been around for awhile. If people are fans of them or not, they can see that the currency applications helped test and improve blockchain.

It’s important to realize that there is more than one type of blockchain technology available today. The tech that powers Bitcoin, for instance, is not exactly the same as the tech that powers other digital currency or other kinds of applications. Also, people who want to develop a blockchain app don’t have to reinvent the wheel. They can find developed versions of this technology to install upon their own blockchain nodes. Some of these systems are fairly basic, but some even have built-in processing that can execute contracts, such as https://path.network/path-performance-monitoring/

Why Consider Blockchain Tech?

Anybody who needs to develop an application that could benefit from improved security, visibility and efficiency should consider blockchain technology. Some people have said that this emerging technology may become as disruptive as the internet.