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Blockchain: turning buzzword into a benefit

Blockchain technology takes the whole world into the future. It can disrupt or change business models in virtually every industry. One of the challenges companies face is the need to innovate in a highly competitive market.

Blockchain technology takes the whole world into the future. It can disrupt or change business models in virtually every industry. One of the challenges companies face is the need to innovate in a highly competitive market.

In our blog post, we described in detail what blockchain is, its advantages and limitations, blockchain technology use cases, and what opportunities the use of blockchain in the IoT, healthcare, and telecommunications industries will bring to the modern market.

Explanation of what the technology is and how blockchain works?

In 2022, words like blockchain and cryptocurrencies come as no surprise to most people. Satoshi Nakamoto introduced the concept of blockchain implemented in Bitcoin back in 2009. Literally, a blockchain mean a chain of blocks in which certain information is stored. The following stages of blockchain operation can be distinguished:

  1. The transaction is initiated.
  2. A “block” representing that transaction is created.
  3. The block is sent to every node (participant) in the network.
  4. Node validates (confirms) the transaction.
  5. The new block is added to the existing blockchain.
  6. The update is distributed across the network.

Today blockchain development companies are realizing the benefits of blockchain technology. Such industries as healthcare, fintech, retail, real estate, public sector, web 3.0, supply chains, and others are looking for ways to integrate blockchain into their infrastructures.

Types of blockchain

There are four main types of blockchain:

  • Public blockchain that takes into account the main principles of the technology. All users are equal, and everyone has access to all information.
  • Private blockchain can be used by a limited circle of people. You can join the network only by invitation or if certain requirements are met. Inside the private blockchain, you can distribute roles and access levels. A private blockchain is contrary to the main principles of the network: transparency and decentralization, but it can be used to perform specific business tasks while maintaining the commercial secrets.
  • The operation of the blockchain consortium limits the free access of users to the network and privately decides who can become a member of the blockchain or which transactions will be published. This ensures that the company can work with its stakeholders while limiting outside interference.
  • A hybrid blockchain combines the privacy benefits of a private blockchain with the security and transparency benefits of a public blockchain. This gives companies considerable flexibility in choosing what data they want to make public and transparent, and what data they want to keep private.

What are blockchain advantages and disadvantages?

We highlight the following blockchain advantages:

  1. Security

    The security of the blockchain is ensured by an immutable record of transactions with end-to-end encryption, making fraud virtually impossible. In addition, the data in the blockchain is stored in a distributed ledger, which makes it almost impossible to hack.

  2. Privacy

    Blockchain solves the problem of privacy better than traditional computer systems by anonymizing data and requiring permissions to restrict access.

  3. Trust

    Security leads to an increase in the level of trust individuals or organizations have in the system. They are willing to engage in business transactions that involve the exchange of data or assets without the involvement of a third party.

  4. Cost reduction

    Blockchain can reduce costs for organizations by increasing the efficiency of transaction processing. In addition, enterprises reduce costs by eliminating intermediaries - third-party providers that provide data processing.

  5. Speed

    Blockchain is superior to other processes and technologies in terms of speed. By eliminating the third party and replacing the remaining manual processes, transactions are processed much faster — in seconds or less.

  6. Permanence

    Transactions once added to the blockchain cannot be changed or deleted. All transactions contain a record of the time and date, so the blockchain can be used to track information over time, providing a safe and secure information audit.

Limits of blockchain technology

The advantages of the blockchain are obvious. However, you should carefully consider using the blockchain in your project. Although effective, there are several limitations of blockchain technology:

  1. Fraud risk

    Blockchain decentralization adds more privacy and anonymity, making it attractive to criminals. Tracing illegal transactions on the blockchain is more difficult than through name-linked bank transactions.

  2. Scalability

    One of the biggest disadvantages of blockchain technology is that it cannot be scaled due to the fixed block size for storing information. When the database becomes too large, it takes more time to check the information and, accordingly, transactions are much slower.

Is blockchain safe?

The blockchain security level is much higher than in central databases since the data is stored in a distributed network. If there is a discrepancy between data stored in a distributed network with data on most computers, they are considered invalid. This prevents hackers from changing the data.

Attack 51%

Let's take an example from the Bitcoin network to understand this situation more clearly. For fraudsters to change data on the Bitcoin blockchain, more than half of the network must first be taken over. This is called a 51% attack, which requires very high processing power.
As the blockchain network grows and acquires system nodes, the chances of a 51% attack become less likely. First, this is primarily because the cost of performing a 51% attack rises along with the network hash rate (the amount of computing power allocated). Basically, the larger the network and the more nodes that participate, the more hash power is required to manage more than 50% of the network.

Second, if, theoretically, you have 51% of the computing power under control and with its help, you can “push” your transaction, but in this case, all nodes of the system will learn about your behavior and immediately stop operations and transactions.

While the threat of a 51% attack still exists for large blockchains like Bitcoin, the financial costs generally far outweigh the benefits.

Blockchain technology use cases

Blockchain technology is used for many purposes, from providing financial services to administering voting systems. Let's consider the real blockchain use cases.

Cryptocurrency

Most often, blockchain is used today as the basis of cryptocurrencies such as Bitcoin or Ethereum. When people buy, exchange on exchanges, or spend cryptocurrencies, the transactions are recorded on the blockchain. The more people use cryptocurrency, the more widespread blockchain can become.

Banking

In addition to cryptocurrencies, the blockchain is used to process transactions in fiat currencies such as dollars and euros. This can be faster than sending money through a bank or other financial institution, as transactions can be verified faster and processed outside normal business hours.

Asset transferring

Blockchain can also be used to record and transfer ownership of various assets. It is currently very popular with digital assets such as NFTs, digital art, and video ownership representation.

Real estate

Blockchain can be used to process ownership of tangible assets such as real estate. With blockchain, you can make sure that one party owns the property and the other has the money to buy it; they can then complete the transaction and record the sale on the blockchain.

Using the blockchain, it is possible to transfer ownership without manually submitting documents to update the data in the registry, as the data will be instantly updated in the blockchain.

Smart contracts

Another innovation in blockchain is "smart contracts". These digital contracts take effect automatically after the conditions are met. For example, payment for goods can be made instantly, as soon as the buyer and seller comply with all the specified parameters of the transaction.

A well-written smart contract doesn`t require a guarantor of the transaction, such as a notary, and completely eliminates the need for third-party verification of data.

Supply chain

Supply chains involve huge amounts of information, especially when goods move from one part of the world to another. Storing this information on the blockchain will make it easier to manage and monitor the supply chain. You will be able to track the entire process from harvesting to final delivery to the consumer.

Voting

Blockchain voting allows people to cast votes that cannot be faked; relieves people of the need to manually collect and check paper ballots; excludes falsification of voting results.

What is blockchain used for

Blockchain technology is used in various fields around the world:

  • in Switzerland for land registration
  • in South Korea, it is possible to vote using blockchain technology at various election levels
  • South Africa is working to implement a biometric data system to address violations related to the identification of citizens
  • In Singapore, a blockchain-based business is registered, and a crypto-payment system operates.

3 industries adopted blockchain technology

Blockchain and IoT

Integrating blockchain with IoT is a logical step, since blockchain is a technology with fast and secure transactions that guarantees the accuracy and transparency of data.

IoT networks are often used to collect data from disparate sources, which is why blockchain is suitable for rapid processing, transmission, analysis and storage. Many firms are investing heavily in IoT networks using blockchain.

Helium is a IoT blockchain startup known as the first decentralized machine network in the world. The company leverages blockchain for connecting low-power IoT machines such as microchips and routers to the internet. With a blockchain-based infrastructure using radio technology, Helium is one of the successful blockchain IoT companies with capabilities for strengthening internet connections. In addition, the blockchain-based infrastructure of Helium also helps in achieving significant reductions in power required for operating IoT devices.

Blockchain allows organizations to maintain an immutable and transparent ledger of IoT devices, the data they collect, and their interactions with each other. Along with its security options and cryptocurrency applications, blockchain offers an ideal platform for machine-to-machine transactions.

Blockchain and healthcare

The healthcare industry is one of the most discussed use cases along with blockchain in supply chain and the financial sector. Operational restrictions, data errors and bureaucracy are a significant problem in the healthcare industry. Blockchain has several use cases in healthcare, from tracking drug supplies to managing patient data.

For example, Blockpharma is a biotechnology firm based in France, developed from an application that allows the buyer to purchase drug legitimacy at the time of purchase. With the help of the application, you can track pharmaceuticals along the entire chain, from production to the final consumer.

In addition, blockchain has the potential to offer significant security benefits to hospitals, as these institutions are often attacked by hackers due to the value and importance of the data they store.

Companies are exploring blockchain applications for storing digital health information. Such solutions can reduce overall costs as well as improve data privacy and accuracy.

Blockchain and telecommunications

The telecommunications value chain consists of providing the necessary network infrastructure and connectivity for voice, data, multimedia and other related services. There is an exchange of data between networks that requires data protection, data integrity, data verification and fraud prevention.
Blockchain technology offers the telecommunications industry the perfect solution for one of its major requirements. With reliable secure access to data, blockchain is already being used in many applications in the telecommunications industry.

The ability to store a history of user records without any possibility of forgery of these records allows you to manage various aspects of user accounts. Some blockchain applications in the telecommunications industry include the automation of many internal operations such as billing systems, roaming, and supply chain management.

Conclusion

So, as a distributed ledger technology, blockchain has the potential to offer industries, networks, and organizations improved security, transparency, accountability, and efficiency. This technology improves privacy and eliminates the need for trust. It also creates an internet of value where users are able to conduct direct transactions without restrictions. That is why blockchain technology and cryptocurrencies are not only with us for a long time, but also have the ability to transform various industries and aspects of life - from finance, agriculture and big data to governance, voting and law.

Oct 17,2022 ● 15 min read
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