Why is Blockchain Important?
Would you actually put your faith in a system that will maintain your financial records securely, conceal your medical data, or trace your favorite coffee bean from the grower’s field to your cup? The promise of blockchain is that. The key point is that blockchain technology is one of the technologies in the process today. Bitcoin is the first cryptocurrency and initially, it was meant to help them as blockchain now supports other cryptocurrencies as well as many industries like finance, healthcare, supply chain management, etc. In this article, we will discuss why blockchain is important and what it is doing to the industries.
Understanding Blockchain Technology
Why blockchain is so important can be understood by understanding what blockchain is and how it works. The name of blockchain is a bit misleading because blockchain is a decentralized digital ledger that records transactions in a secure and transparent way. But what does that mean?
Let’s take a simple example. Imagine if you’re using a blockchain–based system and would like to introduce some data into the system. Then, you write the data in one of the blockchain blocks, and all of the nodes in the network will check your work. Every block is linked chronologically to another block and creates a chain. After adding the block, it is almost impossible to change the block.
Blockchain is known to be unique because it is decentralized. Because the data is distributed across all the nodes in the network, there is no single point of failure. By doing this, there is less risk of hacking or fraud.
Blockchain is like an electronic ledger that everyone in a group has access to. The same copy will allow one friend to try and change it and the others will be able to know because they all have the same copy. This partnership confirms that the knowledge is correct and dependable.
Role of Blockchain in Enhancing Security
Today, in the present time of the digital world, our biggest problem is no one’s privacy is safe, because we can’t count upon anyone’s private data anymore.
One important reason for blockchain is that it supports security. The design of blockchain is unique, and it is more secure than common centralized systems.
It’s possible you are wondering how blockchain manages to achieve such security.
Since blockchain is only generated and run by their own code, they are not exposed to hackers. With complex cryptographic algorithms, the transactions are encrypted within a block of the blockchain. A new block needs to be validated to the chain by a number of participants in the network. In that sense, no one could change the data. It is difficult once it is added. This condition makes Blockchain considered to be tamper-proof and fraud proof.
It’s the same as a vault with a combination of locks, with myriads of eyes watching the vault all the time; it’s impossible to break into the vault undetected.
The decentralized nature of blockchain also greatly reduces the risk of failure or hacking and also some more. There is no point of failure..If one server is hacked, the information remains safe because copies of the data are stored across multiple computers in the network.
An everyday example is how blockchain can be used to secure digital identities. If everyone’s identity is recorded on the blockchain base system, then everyone can control his own identity data. This can reduce the risk of identity theft or mistakes in identity records.
Blockchain’s Contribution to Transparency and Trust
In the present digital world, where many industries are troubled by corruption, fraud, and lack of accountability, blockchain provides a breath of fresh air. Another reason why blockchain is so important is its ability to promote transparency and trust. This is a very transparent system where all networks are visible to all participants.
In a traditional system transactions are often hidden behind closed doors and managed by centralized authorities that may cause trust issues among participants. But blockchain gives us the decentralized system. This nature of blockchain increases the trust among all participants and makes them transparent and secure.
Imagine a charitable organization using blockchain to track donations. Each contribution, big or small, would be recorded and visible to anyone who wants to see how the funds are being used. This transparency helps build trust, as donors can be confident their money is going toward the cause they intended.
Additionally, blockchain removes the need for middlemen. By cutting out these intermediaries, blockchain makes transactions not only faster but also affordable. Just think about the significant costs associated with cross-border payments or international trade.
For example, consider the process of buying a car from India to the U.S.A . If you buy a car from India, then you also have to pay extra customs charges which is about 25% but if you buy from the blockchain base system you can save your custom charges and also you can track your car.
Blockchain in Supply Chain and Logistics
In another area, blockchain can make a huge impact on the supply chain. It is no secret that Industries have always been plagued by inefficiencies, fraud and a lack of transparency to track goods wherever they are moving through the varied stages of the supply chain. However, blockchain gives us an idea of how things can be tracked. What it provides is a lack of visibility and security, which can never be found with traditional systems.
But how does the blockchain make the supply chains better?
First, let’s talk about transparency. In a classic supply chain, there are various players: manufacturers, suppliers, distributors, and retailers. In each case, the records for the whole process are retained by each party. This makes all the system corrupt and each party can betray other parties. This issue is solved by blockchain, which allows a shared ledger where everybody has access to the same information. Not only is this more transparent, but it also makes it easier to follow the journey of a product back to its origin.
For example, suppose you place the order on a normal supply chain. Doing so is not transparent, takes days, and could trace the watch. However, if you purchase the watch from a blockchain-based supply chain, then it will be traceable from the start and more transparent than a normal one.
Blockchain also reduces fraud. Fake products are a major issue in industries like luxury goods or pharmaceuticals. Blockchain guarantees the product’s authenticity and serves as a testimony of where the product is from. Consumers or businesses can confirm that they are receiving a genuine item by simply scanning a product’s unique blockchain ID.
Consider a scenario where a luxury handbag is purchased online. Using blockchain, the buyer can verify that the bag is authentic by checking its history—from the original designer to the store it was sold in. This increased rust helps consumers and ensures consumers are getting what they paid for.
Moreover, blockchain smooths he logistics process by automating various tasks. By using smart contracts( which is a feature of blockchain) payments are paid when goods reach their destination. This reduces human error and speeds up transactions.
Blockchain in Financial Services
Another well-known use case of blockchain is in the financial sector. It has revolutionized how transactions are conducted, verified, and stored. The traditional banking system, although secure, is often slow, costly, and filled with intermediaries. Blockchain offers a solution by streamlining financial transactions and increasing efficiency.
Just look at the traditional banking system. A simple bank transfer can take several business days, especially if it is an international transaction due to the involvement of multiple banks and currency exchanges. This blockchain enables peer-to-peer transactions without the need for a middleman. It reduces transaction time to mere minutes.
Imagine you are sending money to your friend who lives in another country with the traditional banking system. This could involve delay and extra charges. But if you send with a blockchain base system, the transfer is immediate and fees are often lower.
Moreover, blockchain increases security in financial transactions. Because each transaction is encrypted and recorded on a decentralized network, it is nearly impossible to change once it is confirmed. This protects against fraud.
Additionally, Blockchain technology provides the facility for individuals to engage in the global economy without access to traditional banking services. With a smartphone, people in remote areas can send and receive money. This has the potential to transform millions of lives and provide new opportunities for freelancers.
In countries with unstable banking systems blockchain-based solutions like mobile wallets are empowering people to manage their finances securely.
Role of Blockchain in Healthcare
Blockchain technology is also applied in the domain of health care. Especially in the healthcare sector, there are huge amounts of personal, confidential data that the relevant department handles daily. It is very important to ensure that this data is protected and can be accessed only by the right people. Blockchain is making both the security and the efficiency of the healthcare systems better.
The main benefit of blockchain usage in healthcare is its capability of ensuring secure and unchangeable medical records. Patient data is stored in centralized databases and there are chances to misuse. However, blockchain provides a decentralized mechanism where each patient’s medical history is securely recorded. Only doctors and medical professionals can access this data.
Consider a scenario where a patient visits a new healthcare provider. If its history is recorded with blockchain, then their complete medical history can be easily accessed and verified without the need for paper records.. This reduces the need for multiple tests and reduces administrative errors. This is also easy for doctors.
Another major advantage of blockchain in the medical field is that it can track the supply chain process of pharmaceutical products. Doctors and pharmacists can track the medicines and can identify their originality. It decreases the many medicines’ duplicity issues.
Conclusion
In short, blockchain technology has the potential to revolutionize industries. It enhances security and transparency. Blockchain is already making a significant impact in every industry. As the technology continues to evolve, its applications will also expand. It will bring new opportunities for governments and individuals. We can say that Blockchain is more than just a tool for cryptocurrencies but a transformative force that is shaping the future of technology.
Its importance increases day by day. We should learn more and more about it. Because it is an emerging technology and it will emerge more in the future.
Here, I leave a question for you, and I hope you will answer it in your mind: How much is blockchain today and in the future?