What is Blockchain Technology

Blockchain is a shared, immutable ledger for recording the history of transactions. It fosters a new generation of transactional applications that establish trust, accountability and transparency. Try to think of ‘transactions’ beyond the transfer of money. Blockchain solutions can be adopted to create a trusted environment for transaction-based services, particularly when it comes to ensuring robust and secure authentication and identification.

Widely known as the technology underpinning the digital currency bitcoin, blockchain has acquired a new identity in the enterprise. This coding breakthrough—which consists of concatenated blocks of transactions—allows competitors to share a digital ledger across a network of computers without need for a central authority. No single party has the power to tamper with the records.

Today, top financial institutions and a growing number of companies across industries are experimenting with distributed ledger technology as a trusted way to track the ownership of assets without the need for a central authority, which could speed up transactions and cut costs while lowering the chance of fraud. Blockchain remains in the experimental phase inside many large firms, but the ecosystem has grown rapidly to include eager startups, major technology vendors.

Blockchain technology presents opportunities for disruptive innovation. It enables global business to transact with less friction and more trust. The simplicity and security that blockchain offers has inspired information technology professionals in finance to investigate ways that blockchain's distributed ledger and encryption can be used to provide the banking industry with secure transactions in near-real time, while also reducing the cost of maintaining the necessary infrastructure required for back-end processing.

Benefits of Blockchain Technology

1. Reliable Data:  Blockchain data is complete, consistent, timely, accurate, and widely available. Due to the decentralized networks, blockchain does not have a central point of failure and is better able to withstand malicious attacks.
2. Process Integrity: Users can trust that transactions will be executed exactly as the protocol commands removing the need for a trusted third party. Two parties are able to make an exchange without the oversight or intermediation of a third party, strongly reducing or even eliminating counterparty risk.
3. Transparency and Immutability: Changes to public blockchains are publicly viewable by all parties creating transparency, and all transactions are immutable, meaning they cannot be altered or deleted.
4. Transaction Agility: With all transactions being added to a single public ledger, it reduces the clutter and complications of multiple ledgers.By eliminating third party intermediaries and overhead costs for exchanging assets, blockchains have the potential to greatly reduce transaction fees and transaction times.

Challenges of Blockchain Technology

1. Nascent Technology: Resolving challenges such as transaction speed, the verification process, and data limits will be crucial in making blockchain widely applicable.
2. Uncertain regulatory status: Modern currencies have always been created and regulated by national governments, blockchain and Bitcoin face a hurdle in widespread adoption by pre-existing financial institutions if its government regulation status remains unsettled.
3. Energy consumption: The Bitcoin blockchain network’s miners are attempting 450 thousand trillion solutions per second in efforts to validate transactions, using substantial amounts of computer power.
4. Security and Privacy: While solutions exist, including private or permissioned blockchains and strong encryption, there are still cyber security concerns that need to be addressed before the general public will entrust their personal data to a blockchain solution.

Making Blockchain Ready for Business

Increasing trust, accountability, and transparency across business networks, blockchain technology shows great promise across a wide range of business applications.

• For example, financial institutions can settle securities in minutes instead of days.
• Manufacturers can reduce product recalls by sharing production logs with original equipment manufacturers (OEMs) and regulators.
• In the media and entertainment industry, blockchains offer new business models to content owners, such as music artists.
• In the education sector, blockchain applications could be used for notarizing academic records, enabling students to hold and share their own official records directly with others replacing the need to request records from a central authority.
• And in the public sector, there are opportunities to use blockchains for tax collection, to facilitate voting or as the official registry for government assets.

Businesses of all types can more closely manage the flow of goods and services and related payments with greater speed and less risk.

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