- Blockchain technology came into existence with the launch of Bitcoin in 2009.
- Several startups are adopting the technology witnessing its benefits over the traditional challenges.
The utilisation of blockchain technology has seeped deeper than any of the experts, back in the early 2000s, would have thought. What was once just discussed and researched in a reserved community has now become the primary choice for entrepreneurs and even percolated into established companies.
More startups are using this innovative technology to develop better products, unique solutions and ultimately add more value for their customers. Through blockchain, they aim to target the existing challenges that still haven’t been addressed and which companies consider table stakes in the market.
The Inherent Features of Blockchain
Transparency and Trust
Several companies use software based on the create, read, update, and delete (CRUD) pattern to store and update their data. They generally choose private databases, in the hands of a central authority, for recordkeeping and fetching data. Some even depend on paper records, as a form of backup.
However, these come with challenges of the central entity controlling the entire data and entertaining the right to alter it. In the case of cyber attacks, the entire dataset can be compromised.
With the use of blockchain, companies can keep an immutable record of all the data, especially transactions that are visible to all the layers of the pyramid. From company owners, employees, and clients to janitors, everyone has access to data, making the company’s record book accountable.
Security
Blockchain technology comes with strong inherent safety features including cryptography and consensus mechanisms. Through cryptography, any data is converted into a hash through algorithms (Bitcoin uses SHA-256), which encrypts the data.
The consensus mechanism allows only valid data, which meets all the prerequisite conditions, to be added to the blocks. Once added, it becomes immutable and can never be deleted or altered. As the length of the chain grows, the security of blocks increases proportionally.
Removing Intermediaries
Several companies use the services of several intermediaries to complete their chain, making the process tiring and costly. Especially, in the case of payments that make a user go through several middlemen. In the event of a mistake, the process becomes even more cumbersome with various steps to follow.
Blockchain allows peer-to-peer transactions, removing interagents and saving the company’s resources. These can be put to use in other places like research and development or marketing, appealing the product to a wider audience.
Smart-contracts
Instead of depending on lawyers to make all the deals legitimate and executable based on the preset terms and conditions, companies can now rely on smart contracts. Initially launched by Ethereum, these are prewritten computer codes, which execute automatically when the conditions are met.
Smart contracts can help the company to step their foot in automation and further cut the resources, earlier spent on them. They also make the process more transparent, with the smart contract visible to both parties.
Tokenomics
Companies are trying their best to escape the sharp nails of fiat currencies which are still red with the blood of failed banks, bankrupt companies, and ruined individuals. Blockchain has paved the way for token-based economics, where digital assets store value and are used for payments. Bitcoin, Ethereum, Solana, USDC, and hundreds of other cryptocurrencies are functioning well in the market.
Conclusion
Even the moon has its share of dark spots, and so does blockchain technology. Interoperability is a leading challenge at present, preventing communication between several ecosystems. Although 51% of attacks are hard to carry out, they still are not impossible, and several networks have witnessed them. Malicious hackers are continuously finding loopholes in the network and causing data breaches, stealing of funds, and manipulating token prices.
Blockchain is still in its infancy and as more innovation and research is carried out, the technology is sure to become promising, inviting developers and entrepreneurs globally.
