We all know that blockchain technology underpins our cryptocurrency transfers – but this needn’t be its only application. Around the world, companies, governments and individuals are starting to find new and exciting uses for blockchain. And, with the technology in its infancy, this is only the beginning.
What exactly is blockchain?
You’d be surprised how misunderstood the concept of blockchain is by cryptocurrency aficionados. A blockchain is a record system, which can be put to many purposes. What distinguishes it from a usual digital record system – AKA a database – are a few key features.
A blockchain is not stored on one device. Instead, all devices connected in a blockchain network store identical copies of the blockchain. Using digital cryptographic techniques, the blockchain prevents users from altering any of the data. When new data is added, it must be verified against all of the copies of the blockchain across the whole network.
In this way, distributing the blockchain across a network decentralizes the record, as the whole network must validate any changes to the recorded information. Bits of information that are added to the blockchain are called blocks. So, as stated, a blockchain is indeed a permanent record.
Applications of blockchain technology
1. Traditional financial services
Everybody knows a trading platform that has not yet made use of the blockchain. But those that have are compelling use cases. The first example of blockchain in trading was Linq, launched by Nasdaq in 2015. Linq was able to verify trade transactions using blockchain technology, eschewing the usual transaction validation methods. Since Linq’s launch, blockchain technology has been put to use by a number of trading platforms; although, at this stage, traditional trading platforms still dominate the market.
2. Supply chain management
Anyone who has seen season two of The Wire knows that supply chain recording systems are all too easily manipulated. Jokes aside, David Simon did not have to rely too heavily on his imagination when penning tales of illicit cargo being smuggled by Stevedores who know how to hack the computer system that logs their shipments.
Once you understand the reality of this kind of corruption, the utility of blockchain becomes obvious.
3. Food distribution management
A case similar to the one above, the use of blockchain in food chain management meets the need to combat supplier dishonesty. In some emerging economies, food is labeled as being fresher or more ethically or healthily produced than it really is. The motive is profit. Here again, the blockchain’s indelibility solves a major problem.
There are, of course, many other ways that blockchain can be used, as it is, after all, just an extremely reliable record system. However, from this humble-seeming description, the world-changing cryptocurrencies have emerged, so eyes out for the next exciting use of blockchain.