Blockchain has now become the talk of the town in technology and businesses over the past few years. It’s arguably the most significant innovation since the internet. Individuals, companies, and even governments are flocking toward blockchain technology in a wide range of areas that could affect every person on the planet within a few years.
However, the confusion and obfuscation still exist about what it is exactly. Blockchain technology is such a highly technical, slippery topic, with a bunch of not-so-technical people excited about it. That’s why this technology is not only too complex for tech noobs to understand but also quite complicated even for tech-savvy folks to explain.
Understanding blockchain might be tricky for you. But, luckily, this article will take you on a quick walkthrough of the blockchain technology and wrap your head around it.
What on Earth Is Blockchain?
To put it in a nutshell, blockchain is a decentralized ledger in all transactions in peer to peer networks. This technology allows users to make instant transactions on a system without the requirement for, or cost of, a central party.
So, all the transactions will be recorded (such as date, time, and purchase amount), and each party on a blockchain has access to the entire database and its complete history. That’s what makes this technology reliably transparent and trustworthy– which makes it essential since it reduces any need for checks and balances.
The Perks of Adopting Blockchain
Most individuals or organizations don’t pull the trigger on blockchain technology just because it’s shiny new, but because of the perks and benefits of it. This technology offers unique opportunities for each party on the network, such as:
#1. Tighter security
The decentralization on the blockchain provides more protection than traditional transaction processes since there’s no central server for hackers to attack.
#2. Faster and cheaper transactions
Since blockchain technology eliminates the need for mediators or any third parties, it can provide a quicker and less expensive way to share crucial and confidential data or personal information.
#3. Transparency among involved parties
Blockchain records each step of the transaction in a block, complete with a complex alphanumeric hash code– making the network transparent. It makes every transaction and changes made on the network visible and noticeable for every party involved.
Who Use Blockchain?
Now that you know the basic definition of blockchain and the benefits of it, this time we’re going to get deep on its potential users.
As you already know, blockchain technology offers a highly secure, tamper-resistance transaction that makes some companies from various industries (that focus on security and protection on sensitive data) rely on this technology as the foundation for their products.
Those companies include:
- Logistics and transports
- Trading platforms
- Healthcare services
- Financial services
- Payment Gateways
What’s more interesting is that Some governments (in the UK, US, Estonia, Switzerland, Georgia, and others) are also using blockchain technology to build better public services.
Blockchain: The Drawbacks
After all, there’s no such thing as a free lunch. Along with their perks and benefits, blockchain technology comes with its pitfalls. One of the most prominent disadvantages of this technology is that its wastage of critical natural resources.
Blockchain might secure your data cost-effectively, and all but it doesn’t do any good for the environment. It requires an insane amount of electricity. Some cryptocurrencies, such as Bitcoin alone, currently consume at least 66.7 terawatt-hours per year.
Not to mention that blockchain also requires vast amounts of storage that can grow very large over time. Bitcoin alone needs at least 200 GB of hard drive storage space for the installation.
That’s why this enormous environmental waste makes blockchain technology a subject of heated debate.
Wrapping Up: The Future of Blockchain
Blockchain technology has unique potentials to drive significant changes and create new opportunities across industries – from cryptocurrencies to healthcare services. The actual impact of a distributed ledger is still under consideration.
But, considering that the spurt of applications is already crowding the markets, it may be just a matter of time until blockchain “join the dots” for widespread acceptance and penetrates every industry sector.
For a more comprehensive and fascinating explanation of blockchain technology, the infographic below provides a complete visual guide to the digital ledger:
About the author
Andre Oentoro is the founder of Breadnbeyond, an award-winning explainer video company. He helps businesses increase conversion rates, close more sales, and get positive ROI from explainer videos (in that order).