Blockchain technology is an advanced and strengthen database mechanism. It enables the transparent sharing of information within a business network. A blockchain database stores data in blocks that are interconnected in a chain. The data is chronologically consistent because you cannot remove or modify a string without consensus from the network. With this, you can use blockchain technology to create an immutable or immutable ledger to track orders, payments, bills and other transactions. The system has built-in mechanisms that prevent unauthorized transactions and create consistency in the shared view of these transactions.
Why is blockchain important?
For recording financial transactions traditional database technologies present several challenges. For example, consider selling real estate. Once the money is exchanged, the property’s ownership passes to the buyer. Individually, both the seller and the buyer can record monetary transactions, but neither of the sources can be trusted. The seller can easily claim that he did not receive the money even though he received it, and the buyer can equally argue that he paid the money even though he did not receive it.
To avoid potential legal issues, transactions must be overseen and verified by a trusted third party. The presence of this central authority not only creates a single point of vulnerability but it also complicates the transaction. If the central database were compromised, both parties could suffer.
In a real estate transaction scenario, the blockchain will create a single ledger for the buyer and seller. By both parties all transactions must be approved and are automatically updated in real time on both their ledgers. In historical transactions any corruption will corrupt the entire ledger. These properties of blockchain technology have led to its use in various industries, including the creation of digital currency such as Bitcoin.
How are different industries using blockchain?
Blockchain is an emerging or materializa technology that is being innovatively or creatively adopted by various industries. In the following subsections we describe some use cases in different industries:
To create peer-to-peer energy trading platforms energy companies are using blockchain technology and streamline access to renewable energy. For example, consider these uses:
Blockchain-based energy companies have created a trading platform to sell electricity between individuals. Homeowners use this platform with solar panels to sell their excess solar energy to neighbours. The process is largely automated: smart meters create transactions and the blockchain records them.
Blockchain-based crowdfunding initiatives allow users to sponsor and own solar panels in communities that lack access to energy. Sponsors can also receive rent for these communities once the solar panels are built.
To manage online payments, accounts and market trading, traditional financial systems such as banks and stock exchanges use blockchain services. For example, Singapore Exchange Limited, an investment holding company that provides financial trading services across Asia, is using blockchain technology to build a more efficient interbank payment account. By implementing blockchain, they solved several problems, including batch processing and manual reconciliation of several thousand financial transactions.
Media and entertainment:
To manage copyright data Media and entertainment companies use blockchain systems. Copyright verification is critical to fairly compensating artists. Recording a sale or transfer of copyrighted content requires several transactions. Sony Music Entertainment Japan uses blockchain services to streamline digital rights management. To improve productivity and reduce copyright processing costs they have successfully used a blockchain strategy.
In Blockchains decentralization refers from a centralized entity (individual, organization or group) to the transfer of control and decision-making to a distributed network. To reduce the need for trust between participants, decentralized blockchain networks use transparency.These networks also discourage participants from exercising authority or control over one another in ways that impair the functionality of the network.
Immutability means that something cannot be altered or changed. No participant can tamper with a transaction once someone records it in the shared ledger. If a transaction record contains an error, you must add a new transaction to remove the error, and both transactions are visible to the network.
A blockchain system establishes rules on the consent of participants to record transactions. You can only record new transactions if the majority of participants in the network agree to do so.