Thanks to the ongoing proliferation of cryptocurrencies, blockchain technology, the system that allows cryptocurrencies like Bitcoin to operate, is getting a lot of press. As it stands, there are just about 200 cryptocurrencies in existence, the majority of which make use of blockchain technology.
Is Blockchain Technology Making Transactions Safer?
The amazing thing about blockchain technology is the extent to which it stands to change the way multiple industries operate. While primarily known for its key use within the cryptocurrency arena, blockchain technology has the capacity to change the way information gets exchanged between companies and/or business and in the process can also shave a lot off from the bottom line. To briefly sum up, blockchain technology can cut costs, offer accurate tracking and increased transparency.
More than just a financial conduit
From a business standpoint, it would be advisable to think of blockchain as a next-generation business improvement software. The collaborative nature of blockchain means that it has the potential to improve the interaction processes that occur between companies. This also means a radical reduction in the “cost of trust”. Blockchain’s potential applications can be extended to the motor industry, an industry in which automotive cars are very likely to come into fruition in the future. In this case Blockchain can manage fractional ownership as the vehicle will likely be driven, owned or operated by more than one user. In terms the of the financial services industry, faster and cheaper settlement costs can save billions, and if you’re an online trader, then spread betting as a safe trading option is applicable to various cryptocurrencies that use blockchain technology. When it comes to voting, this very technology can enable voters to make their marks next to applicable parties and candidates by way of their smartphones, tablets or PCs with immediate verifiable results. In terms of the healthcare industry, private patient information can be distributed to multiple providers without the risk of privacy breaches.
But how secure is blockchain technology?
Blockchain technology’s security protocols are based on these three defining attributes: decentralisation, cryptography and consensus. The structural entanglement of these attributes is what makes blockchain transactions safe and free from any form of foul play. Decentralisation, in laymen’s terms means that if a single change is made to one block, a change must be made to the rest, and this allows users (nodes) to spot any fraudulent activity. Cryptography provides a type of password protection which includes a unique ID. The unique ID on each block is also partly sourced from the previous block. Hence, try and change anything retroactively on one block, and the entire train/chain will be affected – thus alerting users to any potential fraudulent activity. Finally there’s consensus, also known as proof of work, and this involves labour on behalf of minors who compete for a Bitcoin prize. Cryptographic puzzles and complex mathematical processes all form part of the proof of work process.
Superior, but not foolproof
At this point, blockchain technology remains an emerging technology and one that faces constant refinement and change. Security issues are quickly resolved and on the whole, as a conduit for monetary and/or digital exchanges, it is superior to its predecessors. Does this make it fool proof? Not likely, but then none of the other monetary systems are, and as long as blockchain technology continues to evolve, it’s only going to get better.