Blockchain

What Is Blockchain Technology And Why Is It Important?

Brandon Bartlett

OBR | CEO

When was the last time you purchased a brand-item like a pair of sunglasses or a handbag? Maybe you like to collect fine wines or luxury watches. Or, you have recently inherited a valuable antique or piece of art work.

In any of these cases, how would you be able to verify that the item is truly authentic or genuine, and that it isn’t a knock-off or even stolen?

With an explosion in online shopping across the world, scammers are making billions of dollars each year from the unsuspecting public by faking branded products. From cosmetics to shoes to aircraft parts, nothing is out of their reach.

These days we are dealing with Malware, hackers and counterfeit goods being put into the supply chains all over the world, it’s increasingly difficult to prove authenticity and guarantee the integrity of any item of value that you are buying.

When you are making investments, little or big, having accurate information about its origin or history is absolutely essential.

What is a Blockchain?

Blockchain can provide you with a single source of truth that’s permanent, verifiable and unchangeable.

Let’s look at a simple definition of what blockchain is.

A blockchain is a constantly growing ledger that keeps a permanent record of all the transactions that have taken place in a secure chronological and immutable way.

IBM defines blockchain as:

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

Key elements of a Blockchain

There are three key elements of a blockchain which adds additional value on top of what the internet is able to regularly offer.

1. Distributed Ledger Technology

Blockchain is referred to as decentralised ledger technology because it is managed by a network of computers, called nodes. The nodes are connected to each other, and each one has the ability to verify and update the data on the ledger as it’s being stored. Transactions are recorded only once, but copies are distributed and stored across the network, eliminating the duplication of effort that’s typical of traditional business networks, such as banks. This makes information stored on a blockchain much more reliable, since there is no single point of failure that can bring the entire system down.

2. Immutable Records

No one can change or tamper with a transaction after it’s been recorded to the shared ledger, giving the ability for a blockchain ledger to be immutable – remain permanent, indelible and an unalterable record of who owns what. If there is a transaction error, then a new transaction must be added to reverse the error. Both transactions are then visible. This key element has the potential to transform the auditing process into a quick, efficient, and cost-effective procedure, and bring more trust and integrity to the data that businesses use and share every day.

3. Smart Contracts

A smart contract is an automated contract that is programmed in to a distributed blockchain network with the terms and conditions of the two parties, such as a buyer and seller. The execution is controlled by the code and transactions are trackable and irreversible.

We have elected to put our money and faith in a mathematical framework that is free of politics and human error.

How Does A Blockchain Work?

When a new transaction is processed, it is transmitted to a network of computers scattered across the world which solves equations to confirm its validity. Once it is validated, it has become a ‘block’ of data. This block of data can be tangible (such as a product), or intangible (intellectual) – recording the who, what when, where of anything you like. As more blocks are validated, they become chained, each block chained to the one before and after it, creating a long permanent history of all transactions, errors and all. Each block will confirm the exact time and sequence of transactions and are linked securely to resolve any fraud issues. This is called the consensus method.

The transactions are linked together in an irreversible chain, where each block strengthens the validity of the block before and after it, rendering it immutable and completely trustworthy.

Advantages To Using Blockchain Technology

Trust: With blockchain, the supply chain becomes more transparent than ever and companies can focus on creating a supply chain that works for both vendors and suppliers, thus reducing the possibilities of theft, counterfeit, and loss of goods. It enables every party to trace the goods and ensure that they are not being replaced or misused during the supply chain process.

Security: Consensus on the accuracy of the transactions is required by the network and validated transactions are permanently recorded. Each transaction is encrypted and has a proper link to the old transaction. No transaction can be deleted by anyone.

Highly Efficient: Blockchain automates the time-consuming processes in a corporation to maximize efficiency and at the same time eradicates human-based errors.

Reduction Of Costs: Due to the removal of third party vendors and less interaction when validating a transaction, the company will be able to reduce overhead costs significantly by using blockchain.

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Use For Blockchain Technology

Learning the real-world-usages for blockchain will give you a true understanding of why it’s here to change the world. We live in a world where, up until more recent times, information has been centralized, leaving the data vulnerable to hackers or even just the few who are in control of it. Blockchain has been breaking the shackles open on centralisation as we now have a peer-to-peer ledger-based solutions to cancel out  centralised authorities.

Currency

The usages for blockchain are absolutely endless, but let’s start with Bitcoin, seeing it is the first and most prominent example in use. Bitcoin is a cryptocurrency or digital asset which is used to exchange value between parties without the need for a bank to resolve the issue of a double-spend.

Unlike a fiat currency like the AUD, USD or YEN, where all of them are printed by the government, cryptocurrencies are different in that they are made by the same mathematical equations that make them work. There is a finite amount that can be created. They are not endless.

But Bitcoin is just one type of cryptocurrency and there are many more, of which many of them have been based on the same concept that Bitcoin.

Healthcare

In March 2020, Covid-19 entered our world and spread across the planet, where hospital systems were not prepared. Hospitals were still adorned with their antiquated centralised data bases, so even hospitals within close proximities could not communicate with each other with ease. How many spare beds are available? What are the supply levels of medicine at each hospital? How many ventilators are spare that could potentially be shared with a hospital a few kilometres away? What about hospitals sharing patient information?

There was no effective communication between the hospitals and a complete lack of transparency in the whole system. Any sharing of information was completely laborious and time-consuming.

By using a system on the blockchain, medicines can be tracked by integrating them into the supply chain. Hospitals can also communicate with each other in regards to patients’ data.

One such innovative company, Burst IQ, is achieving just that. It is a security platform that enables companies to securely transfer patient’s data from one place to another. There is so much scope for blockchain in so many areas of healthcare.

Real Estate

If you’re buying a house, you’ll probably need to check that the title deeds are accurate and that the right parties own the property. You’ll also have intermediaries such as the real estate sales’ person and mortgage brokers who each have their benefits and drawbacks, but certainly time-consuming processes including taking their cuts of the pie.

Blockchain solves the problems in real estate, as it provides transparency and verifiability, thus reducing costs. Intermediaries can be removed all together. The platform will take care of everything, including loans, ownership processing and smart contracts. These uses for blockchain in real estate by no means end there. Property Club is using the blockchain with much success to rent and sell properties in New York City.

Voting

One of the many real-world usages where blockchain can be very helpful is the development of a digital voting system. Blockchain voting can be used to replace the existing methods of voting with a more secure and decentralised method. The technology has been around for quite some time, but only recently has it gained traction as a new concept. The process of blockchain voting can be broken down into several steps:

  1. Participants download a voting app and have their identities verified by the blockchain.
  2. A voting contract is deployed on the blockchain.
  3. All participants vote in the contract.
  4. The contract returns a list of winners.

 

So, voters can vote from the comfort of their lounge rooms and feel confident that the final outcome is true. Check out Voatz, for the blockchain voting system that was trialled in Utah in the 2020 US Presidential election.

Conclusion

Blockchain technology is an ever-growing platform which will continue to develop over the years to come. I have barely scraped the surface. As cryptocurrency is now starting to be understood by more and more people, the market will only continue to flourish.  

If you’re looking to get into cryptocurrency, now is the time! Our team at Orange Brick Road are ready to help you understand cryptocurrency and the blockchain further so you can take control of your funds and grow your wealth.

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