By Nilesh Gaikwad – Country Manager at EDHEC Business School, France
Not since the commercialization of the Internet in the late 1990s have, people looked up to something with such hope. Like most of the game-changing inventions in history, Blockchain too was originally formed to support a medium for swapping physical currency with a virtual one. Today, it finds an application in almost every industry one can think of. Hence, the curiosity!
What is Blockchain?
In simple terms, it can be termed as a Distributed Database authenticated by a wider community instead of a single-control authority. As the name suggests, it is a chain of blocks. The blocks carry information. Each of these blocks constitutes of the cryptographic key to associate with a previous block and its own resident data. Though everyone can access this data, only authentic parties can create it. To ensure authenticity, these blocks are chained together in adherence with cryptographic principles. These blocks are immutable as once formed they cannot be modified. Thus, a Blockchain can also be termed as a Digital Ledger that records transactions between two parties in a permanent and verifiable manner.
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Blockchains are associated with information transfer. Here, one party starts a transaction by creating a block. The block is made available online and verified by distributed computer terminals or ‘nodes’ and matched against the previous entry in the chain. Once verified, the block is added to that specific chain. Every new block will have its link to the previous block with its unique history. Information corruption of one block renders all subsequent blocks invalid.
Every action is transparent and everyone is accountable
As there is no cost associated with blockchain and do not have a centralized governing authority, the system empowers anyone to initiate a Blockchain. Every action is transparent and everyone is accountable. Blockchains though prevalent on a distributed network, are anything but the traditional client-server model. The most distinct advantage of Blockchain is Decentralization. In a client-server model, control of information remains with the client. Whereas within Blockchain, the transactions are broadcasted, with every node responsible to update the events.It is a play of distributed database. Thus mooting the need of a central authority. Instead of a single centralized version of information, Blockchains exist as a shared and continuously harmonized information chains. As the information is not stored in a single place, information cannot come under a concentrated cyber-attack or elimination through physical damage.
BlockChain is derived from a combination of existing technologies
For its ground-shattering applications, BlockChain technology is nothing new but derived from a combination of existing technologies, viz – private key cryptography, P2P Network & Blockchain protocol. Every Blockchains’s trust factor is dependent on identifying oneself and authorization to access the information. Private Key Cryptography ensures identity, P2P Network provides a permission matrix and Protocol offers the platform for blockchain. This set-up ensures the need for a central collaborator does not arise.
Some Applications in Industry
Blockchains have already removed the need for intermediaries in a transaction. It provides an automated trade life cycle with all participants having access to the same data.
As most of the government departments work in silos, managing the data transactional challenges is key. Blockchains can ensure uniformity of data across the departments. It enables better management and keeping the information up to date.
Improving the storage, security and privacy of the healthcare data is a key challenge that can be overcome through Blockchain.
The biggest concern with buying products is whether the company followed the ethical / cultural norms during the manufacturing process. Distributed ledgers will make it easy to certify these processes.
Internet of Things
As more and more Smart Devices get accepted by consumers, data being collected and stored will help create an efficient system with better cost-monitoring. Network controlled management of these systems shall be in great demand in years to come. Already companies like Google, Samsung, Amazon, Microsoft etc. are investing heavily to become dominant in this field.
Land title registration & identification of frauds within the real estate market can be optimized through improved record keeping. Governments are working to sign partnerships to ensure blockchain-based systems of land records.