While blockchain started as just another crypto-related technology, it’s so much more today. Nowadays, blockchain technology has a huge role in the business world and tech innovation alike.
The simplest way to describe it would be to say that it’s a way of recording information that is nearly impossible to change or hack. In a world that’s increasingly reliant on digital assets, it’s more than clear why this would be so useful.
With that in mind and without further ado, here’s why so many consider blockchain to be the future of tech innovation.
Decentralization is one of the key principles of the crypto world, and blockchain technology plays a fundamental role in this field.
First of all, the only way for a peer-to-peer network to function is for the nodes to communicate directly with each other. This will eliminate the need for intermediaries or central servers. In exchange, you get a system called a distributed ledger, which is maintained by a network of nodes that all participate in validating transactions.
The data on the blockchain is replicated in all participating nodes, which means that even if there’s a point of failure, the rest of the blockchain will remain intact.
Also, it becomes impossible for a single entity to gain control over the entirety of the network, which, by default, makes the system in place much more democratic.
2. Reduced costs
The simplest explanation would be to say that, due to their resilience, blockchain networks operate with fewer infrastructure requirements. Not only is it all in the cloud, but the increased level of data security means that you can afford to have a smaller cybersecurity team in your enterprise.
Moreover, whether we’re talking about smart contracts or automated processes, the fact that you need fewer intermediaries already saves a lot of money. These contracts are executed as soon as the conditions are met, meaning you won’t need a solicitor or anything along those lines.
Next, the immutable nature of blockchain facilitates the auditing and compliance process. The auditor and regulator can just access the transaction data and verify it. Everything is transparent on these platforms, which further facilitates things.
The money saved on increased data integrity is something else entirely. It’s really hard to put into words how much you’ll save by not losing this data or paying fees and penalties for having it stolen.
3. Cross-industry applications
One of the reasons for such a stellar rise in this technology is its cross-industry application. First of all, you can use it in supply chain management. This can be used to verify the authenticity of products and improve traceability in the supply chain. Fraud and theft have always plagued this industry, and blockchain might be able to solve this for good.
The role of blockchain is well-documented, especially in decentralized finance, but even in traditional banking, more and more institutions are embracing blockchain. The use of blockchain in facilitating international remittances and creating secure contracts is too big to ignore.
There are even some speculations that, in the future, the immutable nature of blockchain will be integrated into government programs to allow more accurate citizen identification. This is one of the things that could put a serious dent in identity theft.
4. Improving crypto reputation and adoption
The growth of blockchain goes hand in hand with the emergence of new coins on the market. In fact, the biggest bottleneck of the crypto world is still credibility and security. New blockchain developments will inevitably make people more comfortable investing in obscure tokens.
Another thing to remember is that crypto investors usually pay close attention to the development team’s progress. A massive development in the underlying technology will usually lead to a growth in the value of the related crypto.
Cybersecurity is one of the main concerns that first-time investors have with cryptocurrencies. So you’ll send a stronger message when you show them blockchain in action (especially non-crypto related) and then say that crypto security works on a similar principle.
Cryptocurrencies are still new (they’re only been around for 15 years), and it will take some time for people to embrace them fully. Blockchain development can help facilitate that process.
5. Smart contracts
Whenever you’re making a contract, several copies are made so that one party can’t alter their own version and get away with it. There’s no need to keep many different versions and documents with blockchain. There’s just one contract, but it cannot be altered without the necessary authorization. This adds integrity.
The next concept that makes this possible is the one of decentralized execution. Smart contracts will execute on their own on the blockchain; there’s no need for a central authority to authorize or execute them. They’re also executed immediately, as soon as the conditions are met, which means that there is no delay.
No matter how strong the contract is, people are often skeptical about the other party’s willingness to honor them. The best thing about blockchain-based smart contracts is that they allow completely trustless transactions. Every party is safe since there’s no transaction if the conditions aren’t met.
Due to the in-built consensus mechanisms, all transactions on a blockchain are agreed upon by default.
It’s not just that blockchain boosts transparency; it boosts the validity of the display information. You see, once the record is on a blockchain, it’s permanent and cannot be altered or deleted. This means that it will remain there in its original form.
Most blockchains are public and permissionless, meaning that users can independently verify transactions and data. The fact that anyone could access these transaction histories means that people doing business online must be more careful in their dealings.
Ultimately, real-time updates are guaranteed, meaning that the data users see is always up to date.
7. Attracting innovation
Every new technology undergoes a usability test. You see, both individuals and businesses don’t have the luxury of ignoring trends that could give them a competitive edge. Increased security, transparency, and smart contracts are too efficient to be ignored.
As a side-effect of adopting blockchain technology, the world will also have to embrace decentralization of the financial world and higher tokenization. Cryptocurrencies and payment solutions working on these principles will become more widely adopted and accepted.
8. Higher security
As a concept, one of the biggest problems with cryptocurrency is the lack of trust. It’s a new technology, and people just don’t know what to make out of it. In the past, when it first appeared, even paper money saw some backlash and reluctance of people to invest. Today, however, this fear seems just ridiculous.
Sure, major companies and exchanges are increasing their investments in developing more secure digital environments. The important thing to point out is that all of this rests on blockchain technology.
As this trend continues, more companies will be willing to adopt and use crypto assets and blockchain-based platforms. One might argue that, security-wise, blockchain is probably the most trustworthy of all crypto-related technologies.
Hackers and malicious online parties are constantly improving their arsenal, and it was about time that you caught up.
Neither technological innovation nor the business world can afford to ignore blockchain
Nowadays, it’s hard to imagine anything more important than the integrity of online data. So far, blockchain seems to be the closest thing we have to a solution to this problem. So, we might see more improvement in the future and more technologies resting upon it. Whether or not this will be the case, only time will tell.