Since time immemorial, instruments of trust like currency coins, paper money, and banking systems have emerged as assets that protect buyers and sellers. Successful innovations, credit card systems, the internet and mobile technologies have improved the convenience, speed and efficiency of money transactions and eliminating the huge distance between the buyer and the seller.
However, there are many business transactions that still remain inefficient, expensive and having the following limitations. In order to ease business transactions, making it efficient and secure, Blockchain, an online shared distributed ledger, facilitates the process of recording transactions and tracking assets on the business network.
What Is A Blockchain?
A blockchain is an ever expanding list of online records called blocks, that are linked and secured using cryptography. A blockchain records all recent banking transactions in chronological order. It allows market participants to keep track of digital currency transactions, thus decentralizing online record keeping.
Currently, most online transactions have a centralized owner which makes it easy for hackers to hack data. A blockchain decentralizes the data stored and makes it accessible to more than one person, thus making your data hack-proof.
Features Of A Blockchain
A blockchain has a decentralized form of record keeping wherein each individual who uses the blockchain network can avail stored records. This makes blockchain potentially suitable for recording of events such as medical records, and other record management activities like identity management, transaction processing and food traceability.
Advantages Of Using Blockchain
The use of distributed ledger technology (DLT) helps in saving cost, as records are available to those on the blockchain network. DLT systems will make it possible for banks, businesses to streamline internal operations, thus reducing expenses, mistakes and delays caused by traditional methods.
The adoption of DLT will help cost saving in three areas:
- Electronic ledgers are cheaper than that off traditional accounting systems.
- DLT systems result less errors and eliminate repetitive confirmation steps.
- Greater transparency and ease auditing will prevent money laundering.
- Non- human involvement in cross border trades.
- Blockchain systems allow one to make smart transactions.
Blockchain- A Secure Way Forward
Originally this technology was developed for the purpose of accounting virtual currency called Bitcoin. Currently, it is used to verify transactions within digital currencies. This will create a permanent record that cannot be changed. Moreover the records authenticity can be verified by the entire community using a blockchain.
A blockchain does not permit modification of the data stored. It serves as an open distributed ledger that can record transactions between two parties efficiently and in a permanent manner. It is managed by a peer-to-peer network, which means people in the network can view all records stored on it.