Blockchain is a secured distributed ledger technology that stores data on thousands of servers. Blockchain visibility lets anyone on the network see everyone’s entries in real-time. The security protections are applied through cryptography and a network-wide consensus mechanism. It makes it difficult for one user to take control of the whole network.
When a set of data or transactions is added, that information becomes a “block.” Each block is time-stamped and cryptographically linked to the previous one to form the links of an additive or append-only “chain.” Hence the term “blockchain.”
Blockchain helps governments, businesses, and citizens share their documents, information, and valuable resources through government portals that are highly secured due to its cryptography and a network-wide consensus mechanism. The government and citizens’ data and resources within this Blockchain are encrypted and encoded.
Blockchain technology is characterized by its decentralization, transparency, and immutability. There is no single “blockchain technology” as such. Instead, there are variations on the basic theme, each with its specific characteristics determined by its environment and use case.
With those variations, Blockchain minimizes the chances of deception, improves lengthy procedures efficiently, ensures protection, and maintains accountability.
The primary mechanism of blockchain technology is; each block contains data, the hash of the block, and the hash of the previous block. The information that is stored inside a block depends on the type of Blockchain. The Bitcoin blockchain, for example, keeps the details about a transaction in here, such as the sender, receiver, and amount of coins.
A block also has a hash. It identifies a block and all of its contents, and it’s always unique, just as a fingerprint. Once a block is created, its hash is being calculated.
Changing something inside the block will cause the soup to change. The third element inside each block is the hash of the previous block. This approach effectively creates a chain of blocks, and it’s this technique that makes a blockchain so secure.
Apart from security-wise, blockchain technologies work at high speed and without failure due to their network mechanism. Meaning that Blockchain provides efficiency to its use case. Here are five basic principles under which this technology works and perform different functions.
Every person or user on the Blockchain has complete access and control over the databases, and everyone knows the history of their database. No other person or third party can intervene in these databases, and every user has a right to verify his transaction without the interference of a third party.
Communication and exchange of words between peers are done directly without using a central node. Information is carried forwarded through a single node to all other nodes.
Any person who can access this system can quickly look into transactions and the attached value. For the encryption of these transactions, every user is given a 30plus alphanumeric address, which is unique and specific which identifies a transaction.
Once a user has made a transaction and databases and updated accounts, these records can’t be altered. Every record is associated with its specific transaction, and different algorithms and methods are installed to guarantee the recording of transactions in databases.
A blockchain exists in a ledger nature that means transactions are designed in computational logics and secured programs. Users can also put up some specific algorithms that automatically trigger the nodes between transactions.
This technology and its use have been evolved in the financial sector, and its involvement in trading has also been increased. New technologies like Ethereum and Zcash have also been raised because Zcash provides higher safety and privacy than bitcoins.
On the other hand, Ethereum provides a highly secure and developed platform by providing a facility for the transformation of everything from energy markets to hedge funds and decentralized cloud services.
From the consumers’ perspective, companies such as Abra and Circle benefit from this technology because it provides low-cost across-the-border payments. Users of the Master card and Visa card are also using this technology due to its low-cost charges.
Under this technology, users don’t even know the involvement of distributed ledgers, and their businesses are benefited. Moreover, the central bank is also involved in exploring new opportunities to get assistance in monetary policy, lending, and taxation.
As far as the practical application of Blockchain is concerned, it goes beyond financial assets. Information related to goods, identity, digital rights, and credentials can also be stored and secured through distributed ledgers.
The Blockchain information and data are only confirmed when the original information is accurate and correct at first. A blockchain also provides costless verification to any person who is carrying and recording the information.
In a nutshell, this technology reduces intermediaries and minimizes the chances of fraud and irregularities.
We can examine the benefits of blockchain usage in the public sector in three main areas.
At the moment, governments and businesses spend a lot of money and time to improve to manage their current systems. Therefore, they want to reduce costs and divert cash and time into creating something new and improving.
Blockchain removes the need for third parties or intermediaries to manage transactions and keep records using an automated network. There is less interaction needed when it comes to validating a transaction, further removing the need to spend money or time to do basic stuff like sending money abroad, which means that the cost of money and time will be reduced transactional, operational, and infrastructural.
With its system, global economic activities can benefit from Blockchain.
Suppose every asset’s value and ownership is securely recorded in a shared ledger that is entirely transparent and immutable. In that case, the corrupt practices that allowed institutions to hide their struggles will no longer be possible. Blockchain technology can enhance the transparency of capital flows, thereby helping to prevent future financial disasters.
The average bank spends £40 million a year on Know Your Customer (“KYC”) Compliance, according to a recent Thomson Reuters Survey, which also revealed that some banks spend up to £300 million annually on KYC compliance, Anti Money Laundering (“AML”) checks and Customer Due Diligence (“CDD”).
With the help of Blockchain, these organizations will know that the customer’s ID documents have been independently checked and verified, so they will not need to carry out their own KYC checks, reducing their administrative burdens and costs. As data stored on Blockchain is irreversible, it would provide a single source of truth, thereby minimizing duplication or error.
Also, commercial activities can benefit from blockchain systems. A good application and of this can be seen in insurances. In the Internet of Things, cars, electronic devices, or home appliances can have their insurance policies registered and administered by smart contracts in a blockchain network, automatically detecting damage first and then triggering the repair process, as well as claims and payments.
The advantages of cryptocurrencies and blockchain protocols stem from decentralization. Businesses and individuals have complete control of their transactions through blockchain technology and need not fear interference from central authorities, such as banks. Further, the more companies and individuals use blockchain technology, the stronger it becomes.
Blockchain solves the time-consuming process and automates them to maximize efficiency. It also eradicates human-based errors with the help of automation. Especially in the healthcare blockchain system, medical records are shared among a decentralized network of verified nodes.
Users, including doctors, nurses, and patients, can access files and add new data autonomously. Doctors and medical providers benefit from this solution by getting access to crucial medical data. This protocol improves data interoperability across different data points, thus enhancing the exchange of information and knowledge.
Blockchain will fasten the commercial activities noters, insurance services, businesses, real estate, and many more. By removing the mediator, it provides a faster process for all commercial activities.
For instance, property management processes will be more efficient with a unified system of ownership records and smart contracts that would automate tenant-landlord agreements.
Blockchain apps could also help companies manage and monitor their supply chains, increase efficiency and workforce requirement due to efficiency increase, and lead to competitive advantage for governments and companies.
Blockchain technology utilizes advanced security compared to other platforms or record-keeping systems. Any transactions that are ever recorded needs to be agreed upon according to the consensus method. Each transaction is encrypted and has a proper link to the old transaction using a hashing method.
Blockchain systems being the far more secure record-keeping system, will decrease the fraud rate dramatically. Tamper-evident and broadly accessible blockchain-based registries could provide much-needed transparency and disclosure.
This means that Blockchain is particularly suited to fight corruption in the registry of assets and track transactions procurement processes. Leveraging a shared and distributed ledgers database eliminates the need for intermediaries, cutting red tape and reducing discretion.
In Blockchain, where a person has only one identity in the whole network, individuals will be protected from identity theft. Its transparent and secure system will enhance the trust of the public in government and digital government portals.
Governments and all commercial activities, businesses, and people can benefit from blockchains’ more secure and transparent system. It will remove the need for trust from the notarization process. It also provides proof of existence, which is essential for the notary process.
The verification is 100% accurate, considering that the data once written within the Blockchain cannot be altered in any possible way.
“Blockchain-based land registries can provide a secure, decentralized, publicly verifiable, and immutable record system through which individuals can definitively prove their land rights.”
With Blockchain, it will become possible to tokenize actions. This means that properties can be rented out for a certain period using pre-defined code. At every stage of a product the information will be recorded and everyone has the information.
No one can change the information that has been entered; there is no “cutting corners or faking the information.” The framework is open and transparent which stops confusion and eliminates disputes.
It can also improve Cybersecurity with the use of decentralized storage solutions. There won’t be a single point of attack for hackers.
And it even prevents piracy by tracking content rights distribution and identifying unauthorized content distribution channels through encryption and watermarking.
In conclusion, blockchain was first introduced as a research project in 1991, Blockchain saw many improvements and developments in two decades, with businesses worldwide speculating about what the technology is capable of and where it’s headed in the years to come.
Just as many proven technologies have been, most applications of Blockchain were financial at the beginning. With many practical applications for the technology already being implemented and explored, Blockchain finally makes a name for itself.
Blockchain stands to make business and government operations more accurate, efficient, secure, and cheap with fewer intermediaries. There remains a certain amount of resistance to Blockchain among some organizations. Technology indeed comes with both drawbacks and opportunities.
Despite these challenges, blockchains can make applications better and will begin to solve case-specific distributed systems problems.
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