Blockchain is disrupting several industries globally and it is redefining the course of automation.
Blockchain technology is a concept that a lot of us have probably been hearing quite a lot about lately. From its involvement with cryptocurrencies to its adoption by other traditional industries, this technology is now the most attractive things out there.
So, we look at how blockchain technology and blockchain technology investment can help drive innovation.
So what is a blockchain?
Essentially, a blockchain is a continuously increasing list of records, also known as blocks. These blocks are joined and secured with the use of cryptography.
The center of any blockchain application is the concept of a distributed ledger technology. Essentially, copies on the ledger are shared across the network nodes of the blockchain. Before a new block of information is added to the chain, it needs to be validated and confirmed by other nodes on the network.
One of the most significant features of a blockchain is security. The network is trusted with the information, as opposed to some form of central authority (like a government or a bank)
More succinctly, a blockchain is a string of blocks. Each of these blocks contains some form of information, such as a transaction.
In every blockchain you’ll find:
Blocks: lists of documents, transactions or other forms of data that are added over time to he distributed ledger.
The chain: a series of blocks linked to each other. Each block gets a digital fingerprint through hashing. This way, it is linked in a secure manner to its predecessor
The network: a network of peer-to-peer nodes that collectedly decide to accept- or reject, as the case may be- the addition of a new block to the chain.
As of this point, the most popular blockchain application is Bitcoin; a digital asset that can be used to make various purchases. Here, a block contains various financial transactions that have been entered over a network. Regularly, Bitcoin miners compete to validate the addition of a new block to the chain. The winner needs to solve a complex math problem for this block to be validated. In doing so, they are rewarded with Bitcoin units as well as processing fees.
The rest of the block validates the new block.
Blockchain disrupts industries in various ways. Its effects in the financial industry differs from how it affects health care. Also, its operations differ from industry to industry to wit, blockchain adoption varies as well. Some industries have seen the advantages of blockchain investment, while others tend to see it as increasingly complex.
To wit, we see how this new form of technology inspires innovation in some industries:
Digital Assets-- Improving the price stability of the cryptocurrency economy
For those who might not know, here are a few facts about cryptocurrencies that you need t be conversant with:
The crypto market isn’t particularly in a good place at this point
Blockchain technology is the underlying technology behind a lot of cryptocurrencies and digital assets
Now, one of the most significant characteristics of the crypto market is the volatility in prices. This volatility has been well-known for years now. This means that a lot of faint-hearted investors will usually end up selling their crypto holdings sooner rather than later.
However, there are ways through which blockchain provides stability to this market.
Take blockchain-based payment network Havven for example. Designed to create a practical digital asset, this network reduced price volatility using a dual token system. The fees from transactions in the system help to collaterize the network. It is secured by blockchain technology and supposedly enables the development of asset-backed stablecoins.
Every transaction generates fees that are paid to holders of the collateral token. As the volume of transactions increases, the platform’s volume also goes up. Havven is a stable network that comes with a low fee. Essentially, the goal is to enable people, regardless of their location, to transact seamlessly with others.
Because the crypto space is getting increasingly crowded, this is a nice addition.
Banking- Improving Foreign Exchange Payment Transactions
One of the most important aspects of the financial industry remains the conduction of foreign exchange transactions. However, due to the complexities in exchange rates, differences in currencies and other factors traditional means of facilitating these payments can be a tad difficult.
However, blockchain adoption by the financial industry can actually help with that as well.
Making funds across international lines through money orders or transfers involves various processes. However, blockchain technology can develop cross-border networks through which money can be exchanged at the speed of information.
The financial industry has been a bit reluctant in implementing blockchain technology investments. However, those that have done so are definitely seeing its dividends.
For instance, HSBC reported that it completed $250 billion in blockchain transactions throughout 2018. These transactions were completed through “FX Everywhere,” its blockchain platform.
Education- Automation in Transcript Verification
Academic credentials need to be recognized universally and verifiable. In postsecondary and K-12, this verification process remains a manual and tedious process. Most times, case-by-case checking, and a lot of paper documentation are involved. With blockchain adoption, however, verification procedures could be streamlined, and fraudulent claims on unearned academic credits can be eradicated.
Intellectual Property- Enhancing Patent Application Processes and Contract Negotiations
Blockchain technology and machine learning will revolutionize the current systems and processes used for creating and managing intellectual property.
After all, a patent is basically a special contract. A contract between the inventor, who shares how the invention works and the governing agency (such as the USPTO) which grants the inventor a 20-year monopoly in the use of the invention.
A lot of the time, patent filings are incredibly stressful. They bounce between the inventors and attorneys before finally being submitted to the governing agency. If inventors from various firms are involved, this can be complex.
However, blockchain technology investment by the R&D industry can make this streamlined, efficiency and more transparent. This can be done through a shared source on the application’s current level and any various changes that can be modified and seen by all.
The United States General Services Administration is already reportedly looking at how blockchain can help speed up and improve the security of vendor contract negotiations.
Commerce- Removing the Middleman
A lot of payment transactions rely on central processing authorities- or middlemen. Their involvement means additional time is required for payment settlement. However, blockchain adoption will provide a quicker and transparent way for parties to pay each other. This will remove the dependence on central authorities like SWIFT. Essentially, funds are received instantly.
In October 2018, various banks came together to finance the eTrade Connect; a platform that is capable of improving the efficiency of international trade transactions. Essentially, this platform can cut the time taken for transactions to be approved. As opposed to 36 hours, it gets things done in just 4 hours.
The blockchain is here to stay and it will drive innovation in many ways in the years to come.
Published by Johanne Cosihan