Blockchain is frequently mentioned in finance, tech and business content, but with little explanation behind it you may be wondering: just what the heck is blockchain anyway? Is it a good thing or a bad thing? The new internet, or a nefarious ponzi scheme to rob us all of our hard-earned money?
Blockchain is a revolutionary technology, but the concept is surprisingly simple. Blockchain is simply a very sophisticated, online ledger system. A super-cool spreadsheet that keeps data secure, accessible, and accurate.
First, let’s break down how a blockchain works
The best way to illustrate the concept of blockchain is this: picture a spreadsheet used to keep track of a company’s finances. Now imagine that spreadsheet data exists simultaneously across servers all over the country, and that it automatically updates and continually reconciles itself.
Blockchain is, basically, the world’s coolest spreadsheet.
Blockchain technology is mostly referenced alongside another digital newcomer, bitcoin, but the two are not synonymous. Bitcoin is digital currency; blockchain is a digital ledger used to track bitcoin transfers. Blockchain technology can be used to record and access any number of data sets.
In a blockchain system, users can simultaneously add transactions, blocks, from multiple places. Being able to add to the ledger anywhere eliminates the need for an order fulfillment middleman. Each block has a unique code called a hash. The transactions are approved and verified, through a complicated process called mining, and then linked together in a chain.
See how that works?
Blockchain technology is transparent but incorruptible
If the idea of your data being stored across hundreds of servers makes you feel a bit nervous, don’t fret. Blockchain is actually one of the safest ways to store related data sets on the internet.
Blockchain technology uses cryptography to encrypt all of the data, and since the information isn’t stored in one, central location, it can’t be hacked and stolen. Also, since the transactions are linked, the data cannot be altered without the alteration of subsequent blocks, which would disrupt the chain.
Industries benefiting from blockchain technology
Major industries have already taken notice and have begun implementing blockchain to improve efficiency, security and even make the world a better place. We’ve all heard about how blockchain technology is revolutionizing the financial sector, but did you know it may one day help students earn a degree, or help doctors provide better patient outcomes, or even help power your home?
Healthcare. The healthcare industry has been plagued with interoperability issues. You’ve experienced this anytime you’ve had to fill out the same form three times for three different departments in the same hospital. Many large healthcare systems are investing in blockchain technology to address this and patient privacy issues.
Higher education. Blockchain technology will allow colleges and universities to combat fraud and share information more quickly through transparent, linked academic accreditations, transcripts and diplomas.
Blockchain technology is improving efficiency, security, and even making the world a better place.
Manufacturing. A supply chain is basically a series of transactions that link together to create an end product. Using blockchain to document the transactions in a supply chain can reduce errors, delays, and additional costs.
Utilities. The electric company giants probably hate this idea, but a couple of intrepid startups have used blockchain technology to allow energy consumption in a decentralized grid.
Nonprofits. Charities handle large amounts of money, and intangible yet valuable assets, and have complex accounting systems. According to the Charities Aid Foundation, blockchain can streamline accounting and improve the way organizations raise funds.
Starting with blockchain in your business
Ready to get a seat on the blockchain bandwagon? Hold your horses. First, ask yourself a few questions:
- Do I have a clearly defined pain point I believe blockchain technology could solve?
- How would blockchain technology improve my customer’s experience?
- What resources will I need to invest in to implement a blockchain solution?