Blockchain is a game-changing technology that is witnessing a meteoric rise in the current market scenario. Startups, as well as seasoned companies, are using blockchain in business for enhanced security, traceability, transparency & quicker access of data.
For the past few years, blockchain was synonymous with bitcoin and similar digital currencies. However, the technology behind bitcoin is superior due to its transparency, decentralization & Immutability. Thus it can be used in various fields of business. Let us understand the blockchain definition briefly before understanding the significance of blockchain for business.
What is Blockchain?
Blockchain is known as a Digital Ledger i.e a system that records transactions & other activities which are stored across multiple nodes or a peer-to-peer network. These records can then be accessed securely without the risk of data corruption or privacy concerns.
How does Blockchain work?
Let us take a simple example. John wants to transfer money to Kevin. This online transaction can be pictured as a block. This block is distributed across the network in an encrypted manner which is known as Decentralization of Data. The network makes sure that the transaction is valid by cross-referencing the data. It is then connected to a chain of blocks which themselves have data in it. It is further created as a permanent record. Then the ownership of the money is given to Kevin and the transaction is made complete.
What is the Significance of Blockchain in business?
Blockchain simplifies the process of obtaining shared and reliable access to data. Before Blockchain came to the market, each department in an organization had its own set of data. This was then sent to other departments which had to verify it & then work on it for further purposes.
This is where Blockchain changes the market. It ensures that the proper source of data is shown while maintaining its validity, security and quality. Thus shared access of data is enhanced which in turn results in better productivity of a business. Benefits of Blockchain in BusinessThe following are 5 reasons why blockchain is important for business:
Innovative Decentralization of data:
Decentralization itself means that a single entity or a person would not be taking care of the framework. It simplifies this process by distributing data to a group of nodes. Due to this, users can access the data or store their data securely without the requirement of a governing authority. This results in less failure of systems, more user control & reliability of data.
- Immutability of data:
This is one of the leading benefits of blockchain technology. Since data is distributed over a collection of nodes, every node has a copy of the digital record. If a new transaction or document needs to be added, every node will check the validity before adding it to the block. If the data which needs to be added is not consistent with the other nodes, then it won’t be added to the record. Once the data is added, it cannot be updated or deleted. In this way, blockchain in business ensures validity & transparency of data.
- Robust Security:
In addition to the distribution of data on various nodes, Blockchain uses encryption technology to secure the data. But not just any method of encryption, Blockchain technology uses Cryptography method to provide enterprise grade security. Cryptography is a highly sophisticated mathematical algorithm that protects data from attacks. Thus Blockchain in Business ensures that any data which is being added carries this reliable encryption for an added level of security.
- Validation & Consensus between the nodes:
A core part of Blockchain as a service is the algorithm to verify & agree on a particular data entry. As a user adds a new data file or transaction, millions of nodes work in tandem to verify whether the data is legitimate or not. If the majority of the nodes agree with the data then it is added in the block otherwise it is rejected. In this way, decision-making is accelerated & at the same time reliability of data is upheld.
- Quick Settlement of Transactions & Data:
Banking systems use a traditional way of transaction which results in less output & wastage of time. This is similar for transactions by a single person or large entities. By adopting blockchain in business, these activities can be smartly managed & quickly settled without worrying about privacy or security concerns.
Thus, Blockchain is important in eliminating the need for a single authority which leads to a smoother workflow in organisations. Thus effective use of technology behind Blockchain in Business will pave the way for consistent business growth coupled with world-class security & reliable management of data. We at ARSR Tech partner with many leading enterprises as well as startups & help them with Blockchain and allied solutions to solve security and transparency challenges.