The blockchain is one of the hottest words in the finance industry today. With technology fast-tracking the job market in a years’ time, the development s expected to escalate over a period of time.
Let us have a look at what the infographic says about this hyped technology.
What is Blockchain Technology?
The blockchain is a distributed decentralized ledger storing the entire data and information across networks. By making use of this technology the participants can easily confirm transactions that take place without the requirement of a third certifying authority. Once the information is entered it cannot be erased, the blockchain contains a verifiable record of every transaction made.
How does it work?
The main hypothesis in blockchain creates a system of distributed consensus in the online world. When a new transaction comes into the blockchain, there is a copy of the node. Now nodes are nothing but the replica of a ledger. These nodes are essential and help maintain the integrity of a blockchain.
When someone requests a transaction of the data, it is then broadcasted from peer to peer network that has thousands of computers called as nodes. These nodes like mentioned previously help in high maintenance to preserve the integrity of a blockchain. Also, the entire history of the blockchain can be preserved even if there is just a single node running it everywhere. The nodes make it impossible for terrorist and other groups of individuals looking to hack into the blockchain.
Once this is complete, the validation of the transaction happens by using advanced algorithms. The transaction that is verified can either be cryptocurrency, records, contracts, and other similar transaction. On verification, this transaction is then combined with another transaction to creating a new block of data for the ledger.
The new block that is added in the blockchain cannot be further altered or changed. Blockchain standard for compliance and trust is done for validation, record keeping, and to enhance security.
Now that you have seen how it works, let us look at the benefits of blockchain:
- It provides enhanced security – blockchain acts as one of the most secured record keeping systems. Securing data is very crucial which is why finance organizations are now relying on this technology for reliable blockchain solutions.
- Greater transparency – it is a type of a distributed ledger where all the participants can share the same documentation. And this shared version can only be agreed upon and entrusted upon through consensus.
- Improved traceability – when a company trades through a complex supply chain, there’s a familiarity with how difficult it can get to trace the product or item back to its origin. But in the case of blockchain technology, it gets easier because you get to access and edit the audit that helps you identify where the asset emerged from and the stops it has taken throughout the journey.
- Permanent ledger – blockchain transaction and information cannot be altered and is immutable.
- Cost reduction – for any businesses, cost reduction is always a priority. But the best part about blockchain is that it doesn’t involve a third party or a middleman to get involved.
- Increased efficiency and speed – using traditional means and trading anything online is time-consuming and a heavy process. But by using blockchain technology the processes get streamlined and the transaction can be done faster and efficiently.