With many companies in Dubai trying to adhere to the 10/10 innovation goal, set by the Dubai Government, by the year 2020, it is important to understand the significance of blockchain technology. What is blockchain technology and more importantly, why will it be relevant to the future of your business?
Stuart Haber and W. Scott Stornetta first conceived Blockchain with their production of a technology called Cryptology. This was later globally recognised by the introduction of Bitcoin by Satoshi Nakamoto. Bitcoin facilitated blockchain technology to provide a crypto (digital) currency, one that provided a solution to a worldwide problem: digital transactional inaccuracy and fraud. It provided a digital authentication and time stamp to prove (or disprove) every transaction that occurs.
How Does It Work?
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using a complex digital encryption. Each block contains a proven link to a previous block, it’s transactional data and its timestamp. The blockchain continues to grow with your proven data record and survives as an unalterable form.
The blocks that make up this chain are the individual transactions that are made. Each transaction, once requested, is broken into pieces using an encrypted code. The piece is sent to a verified network of nodes (in Bitcoin’s case, people that are given a computing puzzle to solve, “miners”). This network will verify their part of the transaction. Once all pieces have been verified, the individual pieces are recollected as a Block. This block is the transaction that has now been verified by numerous individual sources. The block never has a single owner and is reliant on the collective verification work of a network. The block is also unable to be changed retroactively; therefore its transactional history is proven and secure.
Here is a simplified explanation of the system. Think of a Microsoft Word document - when someone writes an article and sends it to another for additions, the person sending the document has to wait for the document to return and can only manually check to see if everything that was sent was still there and intact. Blockchain is more like the Google Drive Docs application. It allows multiple people to work on an article and this article consists in only one form. It does not have duplicates and everyone that is working on the document can see all of the changes. Imagine now using the power of thousands of individual computers that act as these verifiers.
How Can It Be Used For My Business?
The simple fact that blockchain provides an unalterable record of a transaction means that it can be applied to many situations in business. Its ability to create audible digital records allows it to be applied to anything that requires a complete trail of information.
The most obvious use is by anything that exchanges money digitally. Banks and other financial institutions suffer from continual attempts to defraud the system such as double spending. Even the integrity of its information can be corrupted by human error. Blockchain mitigates these risks by adding a process of robust security to each step.
Blockchain has the ability to verify not only financial transactions but also any digital transaction. Contracts can be made “smart”, by utilizing a decentralised platform you can produce and maintain contracts without any possibility of downtime, censorship, fraud or third-party interference. Think of the costs legal firms could save by removing the manual checking processes from its workflows for example.
Most of the products that we buy are made up of multiple smaller units provided by various vendors. Having the ability to track and verify this entire supply chain is possible. No longer are you at the mercy of your suppliers, you can now see exactly at what stage each supplier is, and you can hold them accountable for their actions.
Even paying your employees can utilise the many strengths of this technology. If your company pays people overseas, for example, blockchain could be a huge money saver. Utilisation of it’s network could circumvent the lengthy transaction times and costs in dealing with international banks.
Blockchain technology truly is a revelation in the digital world. In a time where transactions and processes are susceptible to many inefficiencies and security risks, it is a solution that needs to be and will be implemented. Your action to move fast will ensure that these risks do not affect your business.
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