Blockchain technology provides several benefits when compared to traditional systems, and it is being implemented in different sectors to make improvements in existing systems, and make the systems more efficient, fast and secure. It is also being used to develop new systems with high innovations, and that is why the blockchain technology is being assumed as the promising technology of the future.
Blockchain is a distributed ledger which stores the data or transactions in the blocks which are connected together, making the blockchain. It is decentralized, means it’s not controlled by single organization or company. Below we will discuss the major benefits of the blockchain technology.
As mentioned above, the core feature and benefit of blockchain is that it is decentralized technology, means it is not controlled or maintained by any single organization, company or group, but it is controlled by thousands of users (also called miners) existing at different locations of the world, and all are connected or joined together in P2P(Peer-To-Peer Network). Each miner owns the powerful computing machine which solves the complex mathematical problems to verify the transactions in the ledger.
In blockchain technology, people don’t need to trust each other, as the blockchain database is distributed and everyone has a copy of the ledger, and whenever any node or miner verify the transaction and add it to the blockchain as a new record, that record is then replicated to all other nodes in the network synchronously. In short, all nodes are putting an eye on each other’s work, so they don’t need to trust each other, hence this process itself establishes a trust into the blockchain database.
As compared to traditional centralized systems, blockchain technology is highly transparent because it is a publicly distributed ledger which allows everyone to view the transactions and to verify them that either each transaction is valid or invalid, hence making the system transparent.
In blockchain technology, miners use the consensus algorithms like proof of work (PoW) and proof of stake (PoS) to validate the transactions. Proof of work algorithm is based on cryptography in which there is a complex problem or puzzle which miner need to solve in order to validate the transaction and to add the transaction or block to the blockchain, so in this way blockchain database always remain consistent and accurate. And, blockchain technology also eliminates the biggest security problem in the currency transactions, called double-spending.
Blockchain technology also provides data immutability. In blockchain database, each new block is connected with the previous one, making the chain of blocks, which goes till the first ever block (the block which was created first in the history of this blockchain database), so blockchain is immutable means once any block or transaction is stored in blockchain it will remain all the time and it will never be changed or deleted.
Industries which use supply chain management or any other technique to trace their products and goods to verify that they reach the end users can make use of the blockchain technology which provides data immutability means a full history or record of the activities done on these products. This will greatly improve their productivity, accuracy, and utilization of products.
In blockchain network, all nodes or miners are connected in a peer-to-peer network, as the network grows with the new peers connecting, the scalability of the network automatically increases.
Traditional banking institutions and intermediaries charge high fees with each transaction, but blockchain technology removes the need for intermediaries and charge very low.
Traditional banks take days or months to complete one transaction because each transaction goes from several verification authorities and intermediaries, but blockchain technology performs transactions in minutes, as there are no intermediaries and third-parties.
In blockchain technology, each new data or transaction is distributed across all the nodes in the network and all nodes exist at different locations running independently, so if some nodes gets failed or stop working, it will not affect the network and other nodes will continue to work, so data can easily be recovered until a single node is running, and there are thousands of nodes running, so it is impossible that all nodes get failed simultaneously.
As mentioned above, if some nodes get failed, it will not affect the whole network and users still be able to send and receive money to each other, so blockchain provides high availability and it continues to run 24/7, even if some nodes are not working.
In blockchain technology, people don’t need to know each other to do transactions, because each transaction done between two parties is verified by all the nodes connected together in the peer-to-peer network, which eliminates the risks of fraudulent transactions or cheat. Furthermore, blockchain allows the different IoT devices to do transactions from different locations without knowing each other.
HIGHLY INNOVATIVE TECHNOLOGY
Blockchain is the highly innovative technology and comes with the lot great features and benefits. Finance and banking institutions are implementing it to improve their services in a sense of efficiency, speed, and security. Blockchain has been implemented in different sectors and fields like finance, cyber security, healthcare, E-voting systems, secure communications, devices connectivity, digital identity, real estate, privacy etc. Different people are experimenting with it and developing new technologies based on the blockchain. So it has a potential to which we can bring our innovative ideas in real life.