Nov 30, 2023 JIN
Unlocking Blockchain: Beyond the World of Cryptocurrency
Familiar factors like the social web, big data, the cloud, robots, or artificial intelligence won’t steer the forthcoming decade’s most significant transformation in business. In an unexpected twist, it’s the blockchain – the technology underpinning digital currencies such as Bitcoin.
Looking back at the evolution of blockchain, it becomes evident that the technology gained prominence solely due to its connection with Bitcoin’s revolutionary aspect. However, it’s more than that. As blockchain technology becomes more accessible and user-friendly, seizing this evolving technology is vital to brace for the times ahead. If you’re new to blockchain, you’re at the right place to establish a fundamental understanding. Let’s delve into “What is blockchain technology?”, how it became popular, its impact, and how this knowledge can propel your career in our blog today!
What is blockchain technology?
Blockchain technology creates, secures, verifies, and distributes valuable and immutable records, transactions, or data.
At the core of blockchain lies a collective digital ledger that remains unmodifiable. This ledger records transactions within a network that can be public or private, operating on a peer-to-peer basis. The collaborative nature of the blockchain network ensures it functions as an authoritative source of information.
The term “blockchain” originates from its data storage method—transaction data is organized into blocks that interconnect to form a sequential chain. As the volume of transactions increases, the blockchain expands accordingly. These blocks retain and validate transaction details, securing them through cryptographic techniques that adhere to the network’s predefined rules.
Why is blockchain popular?
Many people mistakenly equate blockchain with bitcoin, but they are distinctively different. Blockchain is a technology capable of supporting diverse applications across various industries, such as finance, supply chain, and manufacturing. On the other hand, Bitcoin is a currency that relies on blockchain for security.
As an emerging technology, blockchain quickly became popular and is used widely thanks to numerous advantages in our increasingly digital world:
- High Security: It utilizes digital signatures to ensure fraud-free transactions, making data corruption or alteration by others without proper authorization virtually impossible.
- Decentralized System: Unlike traditional transactions that require approval from regulatory bodies like governments or banks, Blockchain transactions are carried out through mutual consensus among users. This results in smoother, safer, and quicker transactions.
- Automation Capability: Blockchain is programmable and can automatically trigger systematic actions, events, and payments based on predefined criteria.
While heralded for its revolutionary potential, blockchain is not without its drawbacks, which need to be considered carefully by enterprises:
- The management of private keys: If users misplace or lose their private keys, the consequences can be dire, as it could result in losing access to their digital assets or data. This vulnerability has highlighted the need for robust key management solutions.
- The issue of scalability: The design of many blockchain systems limits the number of transactions that can be processed per node, leading to potential bottlenecks and slower transaction times as the network grows.
- The immutable nature of blockchain: While the immutable nature of blockchain is a strength in terms of security, it can also be a hindrance. Modifying or removing data is challenging once data is recorded on the blockchain, making correcting errors or updating information complex.
These disadvantages underscore the importance of balancing the benefits and limitations of blockchain technology in various applications.
The Impact of the Blockchain
As we start to grasp the possibilities unlocked by blockchain, it’s reasonable to predict that the following domains will witness the initial and profound impact:
- Solving Intellectual Property Challenges: The digital era’s first wave left many creators of intellectual property uncompensated. Blockchain, however, offers a fresh platform for IP creators to receive their due value. For instance, a blockchain digital registry can maintain artwork records, including authenticity certificates and ownership information. Startups like Ascribe already utilize blockchain to empower artists, enabling them to upload, watermark, and transfer digital art directly, ensuring proper attribution and compensation.
- Revolutionizing the Sharing Economy: Many businesses in the so-called sharing economy function as intermediaries, aggregating service providers’ offerings and redistributing them through centralized platforms. Blockchain can empower service providers to collaborate directly, receiving a more equitable share of value. Smart agents could seamlessly handle functions managed by companies like Uber on a blockchain. Through blockchain’s trust protocol, cooperative structures can emerge, controlled by members with shared needs, redirecting revenue back to those who provide the services.
- Transforming Manufacturing: 3D printing has already begun reshaping manufacturing and customization, but challenges regarding centralized platforms and intellectual property persist. Blockchain provides a means to store metadata about various substances, opening avenues for corporate manufacturing expansion while preserving IP. This shift can foster new markets, facilitating more seamless transactions between buyers and sellers.
- Enabling the Internet of Things (IoT): The anticipated proliferation of IoT devices necessitates blockchain management capabilities to handle the colossal volume of daily transactions. Traditional financial institutions struggle with microtransactions and swift settlements required for IoT scenarios, such as a factory light purchasing power through a public auction. The Internet of Everything requires a Ledger of Everything.
- Revamping Enterprise Collaboration: Collaboration tools have already transformed knowledge work and management within organizations, especially in industries that require high security, such as software testing and quality assurance companies. However, these tools have limitations, often relying on intermediaries to establish trust and coordinate activities. Blockchain systems can fill this gap, empowering individuals and companies to retain control over their data rather than surrender it to large social network corporations. Projects like Enigma from MIT indicate blockchain’s potential to deliver more prosperous and customizable social networks with enhanced data protection and consumer empowerment.
Where does blockchain go from here?
The origins of blockchain date back to 1979, with significant progress made in 1991. However, it wasn’t until 2011 that the first real-world application, Bitcoin, was launched. Despite Bitcoin’s debut eight years ago, a considerable span in the tech realm, blockchain technology still has a journey ahead. While there are abundant concepts for blockchain utilization across various industries, achieving widespread implementation is a few years away. Whether it’s discussing blockchain’s role in voting, agriculture, government currencies, or entertainment, significant challenges are impeding large-scale adoption.
The potential use cases for deploying blockchain are virtually limitless, but the obstacles lie in gaining acceptance, the courage to lead, and overcoming security concerns. As with any emerging technology, it takes time for users to gain confidence in its security. Unfortunately, high-profile thefts involving cryptocurrencies have cast a shadow on the perception of blockchain technology, even though these attacks often exploit vulnerabilities unrelated to the underlying blockchain.
Despite the setbacks caused by these attacks, they won’t ultimately prevent the progress of blockchain adoption. This transformative technology is poised to revolutionize numerous industries, enhance quality of life, and combat fraud—it’s just a matter of time.
Unlocking Blockchain: Beyond the World of Cryptocurrency
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