Why Blockchain is Much Bigger Than Cryptocurrency

Over the last few years, we have seen how Blockchain became intensely popular in the financial and investment world. What is interesting is the fact that this technology can be used not only for cryptocurrency, but also other fields, such as healthcare, logistics, and government.

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How Blockchain works

Blockchain is a mechanism for creating a distributed ledger that by design is impossible to hack or change. This distributed database allows multiple parties to participate, view and audit the data contained inside each block. The data on a blockchain can't be modified, which makes this system so valuable. All kinds of information can be put in these blocks, and powerful cryptography protects them from any leak.

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A bit of History of Blockchain

As years went by, Blockchain development underwent important stages. In Stage 1 (around 2009), Blockchain was used by Satoshi Nakamoto for his Bitcoin network. It allowed to set up the basic premise of a shared ledger that maintains a cryptocurrency network. Each transaction is approved in a verification process throughout multiple computer members of the network, and then a block with this information is added to the chain. This groundbreaking innovation meant a strong transaction network without the need for a central authority.

Time went on, and the second stage of Blockchain began thanks to Ethereum which introduced the concept of Smart Contracts. It allowed developers to write and run programs inside a block, and thanks to that, all kinds of trust agreements are self-managed, with no need for outside entities. The programs inside a block can monitor every aspect of an agreement, from its beginning to its execution. With this technology, Blockchain can be used for identity management, supply chain, real estate, and so on.

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More than Cryptocurrencies

Nowadays, a world of possibilities has opened with Smart Contracts, and we currently can create secure and decentralized applications. More and more companies are already working with different MVPs or initial developments based on blockchain.

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Examples of use of Blockchain:

1. Initial Coin Offerings

ICO is a digital crowdsource funding model that uses Smart Contracts and cryptocurrency. It became a popular method to raise funds for products and services. The $5.3 billion boom in ICOs in 2017 challenged traditional venture capital. Now many businesses are using this model to raise capital for their projects.

Besides streamlining the fundraising process, the use of smart contracts and cryptocurrencies in an ICO can increase transparency, reduce costs, and help in attracting a larger pool of investors, leading to bigger chances of success.

2. Insurance

The insurance industry spends tens of millions of dollars each year on processing claims. Not only that, but it also actually loses millions of dollars to fraudulent claims. Smart contracts could also help improve the process of claim processing in many ways. Their use can lead to improved efficiency, reduction of costs, increased transparency, as well as improved access to insurance products.

3. Voting

Blockchain can be used to validate a voter‘s identity and record their vote. This information could then be used to initiate an action after all voting had ceased. Since the blocks within a blockchain are impossible to alter once they have been recorded, manipulation of this record would not be possible.

Due to the use of blockchain technology, both transparency and security of voting can increase. Additionally, the trustworthy results would be ensured, which would translate to increased trust and efficiency of the electoral process. One way of doing that can be for example the use of the KYC Verification Process.

4. Transport and Logistics

The transport and logistics sector is becoming increasingly digitized as supply chain management and visibility remain as important as ever, and both are key areas that can be improved by blockchain. Retail companies like Walmart are already leveraging this technology for food traceability.

Transportation and logistics can therefore benefit from the use of blockchain as it improves the efficiency, transparency, and collaboration. Additionally, it can reduce costs and streamline processes, which eventually could lead to improved customer satisfaction.

5. Automated Payments

Digital payments via blockchain-based smart contracts are just around the corner. Smart contracts allow payments to be processed automatically when certain pre-defined conditions have been met. These conditions may include automatic payments when new contracts are approved or when goods have been shipped and received.

Smart contracts can automate the payment process, minimizing the need for intermediaries and paperwork. Additionally, it could reduce administrative costs arising during the payment process. As the blockchain provides a transparent record of all transactions, it also leads to increased security and smaller possibility of fraud.

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The future of Blockchain

All in all, Blockchain is a promising technology that is moving beyond cryptocurrency into more mainstream applications in business. Even though the technology is still in its infancy, it will certainly become more mainstream as companies better understand how blockchain can be adopted into their services and products. As blockchain is characterized by ongoing innovation and development, it will likely be integrated with many other emerging technologies. Of course, there may be challenges to overcome along the way, but the number of benefits resulting from its use will be rewarding. Eventually, it is the use of blockchain that will allow to play a more important role in the digital future.

If you would like to know more about our experience in this area, don't hesitate to get in touch.

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