Have you ever wondered what is the underlying technology that drives cryptocurrencies like Bitcoin or Ethereum that has drawn a lot of mainstream attention and hype in recent years?
What Is Blockchain and How Does It Work?
ALL types of cryptocurrencies use this distributed technology – blockchain, to maintain a secure and decentralised record of transactions. Blockchain is a distributed ledger that is shared among the many nodes of a computer network. This means that this ledger is not solely owned by anyone, but instead has member computers (or nodes) each with identical copies of the ledger on the network. This renders any deliberate changes or hacking quite impossible for any individual trying to take advantage by monopolising or hacking a blockchain network.
Blockchain helps to establish a transparent record order of events. No single node within the network can alter the information itself. Information is irreversible on blockchain and is tamper-proof. For example, imagine there is a hacker who also runs a node on a blockchain trying to alter a blockchain and steal cryptocurrency from everyone else, technically the hacker will not be able to do so. If the hacker were to alter his or her own single copy, it would no longer align with everyone else’s copy. When everyone else cross-references their copies against each other, they would see this one copy stand out, and that hacker’s version of the chain would be cast away as a fraud and not valid.
Well, while blockchain is best known as the host or backbone of cryptocurrencies, it is far more than that, as innovation in this space brought many real-world use cases that are beneficial across a wide range of industries.
Blockchain is used far beyond Bitcoin and cryptocurrency
Did you know? Blockchain technology is already being implemented by many large corporations in their daily operations, with eighty-one out of the top one hundred global companies in the world using this technology in some form. With both government and the private sector investment funds to drive the innovation of blockchain, this technology is increasingly being seen as one of the most important creations of this modern era, with many experts saying that blockchain technology could be the driver of future innovations, just like the emergence of the Internet in the 1990s.
Let us dive deeper into the benefits that blockchain brings across different industries and why there is still enormous potential for blockchain to impact these sectors.
How Is Blockchain Being Used?
- Cross-Border Payments
Traditionally, money transfer has been both expensive and slow, especially for payments across international borders. This is because when multiple currencies are involved, the transfer process requires the participation of multiple banks in multiple locations before the intended recipient can get the money. There are existing services to help facilitate this process in a faster way, but these tend to cost a lot.
Blockchain technology has the potential to provide a much faster and cheaper alternative to traditional cross-border payment methods. Indeed, while typical money remittance costs could be as high as 20% of the transfer amount, blockchain transaction fees are typically just a fraction of that, as well as guaranteed and real-time transaction processing speeds. This is one of the most promising and talked about areas of blockchain technology application.
- Supply Chain Uses
The supply chain is key for many businesses across various industries. Blockchain technology has already been used in multiple industries to keep supply chains and ensure their functions and efficiency by minimizing human intervention and the potential for error especially when there are complex and multi-layered processes involved. The data cannot be altered by any third party, and this helps reduce the chances of corruption and manipulation.
- Identity Management
One of the most problematic results of the internet age has been identity security. There are always attackers or hackers looking to steal and defraud people for personal gain. Blockchain offers an indestructible level of security, by using the independent verification processes that take place throughout member computers on a blockchain network. For instance, blockchain could potentially be used to aid in maintaining voter information and ensuring the proper functioning of the electoral process. Blockchain could be used to transfer user data securely and efficiently across platforms and systems. The technology could also be used to maintain and protect records of real estate ownership, titles, and more.
For medical records, the usage of blockchain helps to ensure accuracy, privacy, and security. Human error for example due to a tired medical staff that accidentally prescribes the wrong amount or type of medicine due to a wrong record key can be avoided. Blockchain also ensures that digital health record data remains secured and shareable with only the parties authorized for access at the moments when they need it. When there is a need for healthcare specialists to refer to a patient’s past medical record, they can do so quickly on the blockchain where records are stored permanently without any falsification by any party during any time.
For example, we are familiar with the MySejahtera mobile app. The digital vaccination certificates in MySejahtera are secured by blockchain technology and come with a traceability feature that shows the exact batch of the vaccine vial used for our inoculation. The vaccination certificate cannot be duplicated because it uses blockchain technology which guarantees its authenticity. The blockchain technology is safe and protects the public’s personal data, and the authenticity of the Covid-19 vaccination certificate is guaranteed.
Conclusion. We’re Still Very Early.
As we can see, the value of blockchain goes beyond the initial implementation envisioned and new ways of utilizing blockchain emerge every day. Many people believe that blockchain is a solution to many problems as it can provide ways to reduce the risk of hacking and data tampering.
We can envision blockchain as fundamental to data as the internet is to information transmission. This is still a field that has yet to be fully explored with an exceptionally broad set of potential uses. Whether we are directly involved in the digital currency space or not, it is essential for us to develop an understanding of blockchain and how it may be used to transform the world so that we can also be a part of this exciting innovation. More understanding and knowledge will help us to look at the fundamentals that shows blockchain is for a long-term development case.
As an investor, the current cryptocurrency or digital asset bear market conditions may seem demotivating, but a better understanding of the underlying technology and fundamentals help to keep in perspective that the potential upside is huge once blockchain adoption increases. Current adoption rate is estimated at just below 5% globally. Between now and mass adoption, there will be plenty of learning and investment opportunities to look forward to.