11 Benefits of Blockchain technology and how it is Changing the World for the Better
The internet is buzzing with thoughts and opinions on what blockchain is, how it’s going to transform the world, and what it means for you. So much so that in December 2017 the word “blockchain” featured in nearly one-third of all Techmeme headlines. But before we dive into how blockchain will change things—and could change things—we need to take a step back and ask: what is blockchain?
A short history lesson introduces you to this new technology as something that can be traced back to 1991 with its first application being in banking transactions.
But the technology didn’t really take off until 2009 when bitcoin was announced to the world, and it has been on the rise since.
In this article, we’re going to look at why blockchain is of interest to everyone and what benefits this new blockchain technology will bring.
Blockchain Defined: Three Essential Components
Before we dive into its benefits, let’s look at how a blockchain works and what components are involved in making it happen.
A blockchain is formed from three fundamental components: a ledger (or database), a consensus mechanism , and smart contracts.
The consensus mechanism is used to validate and confirm the data held in the ledger, and it uses a distributed network of computers to create trust. You’ll find that blockchain’s use of this third component is what differentiates it from traditional databases.
Smart contracts are self-automating computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract between two parties. They operate like a technological vending machine: no third party is needed to verify if you’ve paid for the item you want or if you can take ownership of that item once you’ve paid for it.
So what do they actually do? They can store and transfer data, act as the middleman for a trade transaction, and even help with our legal system.
We can take this example to show you what we mean: imagine your grandma is buying her first house and she’s asked you to be her guarantor. You’d need to go through the whole financial rigmarole of going to the bank, paying all that money for a mortgage, and then waiting for your house to go up in value so you can sell it some day.
11 Benefits of the Blockchain technology
- 1. It allows value to be transferred without an intermediary: Banks, lawyers, or governments all act as intermediaries in a transaction—they also each take their share of the value of the transaction.
- 2. It reduces fraud: Because smart contracts are stored on the public blockchain ledger and can’t be tampered with, it makes fraud almost impossible. In fact, this is what allows cryptocurrencies like bitcoin to have value in the first place.
- 3. It creates certainty: The smart contract ensures that if X happens then Y will automatically occur without human intervention. Blockchain removes the need for people because it is automated technology that is able to understand and execute terms from a contract and self-execute once those terms have been met.
- 4. The transactions are immutable: Once a smart contract is executed, it can’t be changed. This gives the technology an almost magical quality, because with almost no effort you can remove any doubt from the transaction.
- 5. It is transparent: Blockchain makes sure that all transactions are transparent, and that data is immutable and permanent.
- 6. It reduces reliance on third parties: When you use the blockchain in a transaction, you aren’t relying on a third party to do what they are supposed to do.
- 7. It makes everything traceable: Because blockchains use distributed ledger technology (DLT), they are able to track every transaction that has ever happened. This makes them extremely safe and secure because you are able to keep track of every transaction, even on a large scale.
- 8. It is fast: Because the blockchain is a distributed database, it can process tens of thousands of transactions per second with ease. This allows the ledger to keep up with the needs of the transactions that are taking place.
- 9. It is transparent: While some people believe that individuals might be more honest when times are good, if everyone can see how you are behaving, then there’s no way to hide your actions or behavior. That makes blockchain a lot better than traditional databases, because it makes no mistakes at all. This is especially true when you’re dealing with large transactions where transparency and honesty is of utmost importance.
- 10. No chargebacks: Another thing that traditional databases have is chargebacks. With chargebacks, it’s possible to get your money back even after you’ve paid for something, and this is especially common when you’re dealing with transactions with high prices. With a blockchain, there are no chargebacks because there are no third parties involved—so you don’t need to get ripped off by anyone.
- 11. It allows for immediate settlement: When you’re using blockchain technology today, you can expect your transaction to be completed in seconds or minutes instead of the hours or days that it takes on traditional database technology. This is especially important in situations where time might play a role in resolving the transaction as efficiently as possible.
Conclusion – What are the benefits of the Blockchain?
Now that you know what blockchain technology is, where it came from and how we can use it, we can say the following:
As the Internet of value becomes more sophisticated, it will have tremendous impact on our daily lives. Blockchain technology will be able to provide us with solutions to some of the world’s greatest problems – challenges like global poverty, hunger, economic inequality, political corruption and more.
Blockchain is changing the way people live and work. It is allowing us to achieve things we’ve only dreamed about before. But it doesn’t stop there – blockchain technology has every possibility to change the world even further! As this industry evolves at an exponential rate that is hard to predict, you can be sure that blockchain technology is ready to solve new, complex problems that we didn’t even know where there before.
The future is here and this new technology has a lot to offer. It’s not going anywhere anytime soon—in fact, it’s only getting bigger and better as time goes on! Now that you know what blockchain technology is and how it works, start planning for its future at a company near you! What do you think? Leave your comments below.
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