What is blockchain? What are the negatives?

 Posted By - Averon Solutions

 Views - 595

  27 July 2018

Steven K. Brody is Business Development Manager at Averon Solutions with over 30 years IT experience working with both large and small businesses helping them select products and platforms to run their business.

There has been much talk about the blockchain platform in recent times mostly as it relates to cryptocurrencies such as bitcoin and Ether (Ethereum). However, recent blockchain discussions have centered on how this platform will impact business to business transactions. There are two main reasons why businesses would be interested in this platform, security and financial. Financial implications are such that the cost of conducting business would decrease simply because transactions and processes would be conducted without third party involvement. Security issues compared to today’s transactional processes would be greatly tightened up.

What is blockchain?

By definition blockchain is a public ledger where transactions (debits & credits) are recorded and confirmed. It’s a record of events that is shared between two or more parties. More importantly, once information is entered, it cannot be altered. Blocks are appended each time a new transaction is added. Think of a business’s general ledger, blockchain will follow those same accounting principles. The platform runs on a series networked computers. The network can be comprised between two entities or a multiple of entities. No individual or company controls the blockchain.

Much has been publicized in the press and on the web about the monetary transactions associated with cryptocurrencies however, blockchain technology will have a far reaching effect in many different lines of businesses besides the exchange of money. Before money is exchanged there are many processes that must be completed before payment is made, blockchain will be involved in all those preceding steps. Of interest in this new cryptocurrency world, the term “money” may be replace with the word “value”.

For example think in terms of “smart contracts”. Companies such as Airbnb, Uber and other web based businesses can implement this technology. Think of supply chain management, this too can reap benefits of utilizing the blockchain platform. Think of government entities where drivers licenses, passports, birth certificates, etc are electronically stored and where when you need to show the document you do so from a wireless smart device be it a phone, tablet or computer.

Future technologies that are in the not too distant future will incorporate blockchain. For example autonomous vehicles, smart electrical grids & distributed power and smart homes.

What are the benefits of this emerging technology?

A more reliable secured environment then what we currently have. Peer to peer networking, no client server middle stop that would slow up the completion of the transaction. Data once entered cannot be changed. Database information is timestamped and contains full logged information of the transaction. Transactions are transparent as each party has a copy of the blockchain. Scam artists will have a much harder time presenting themselves as a legitimate business.

What are the negatives?

Trust, must be earned and proven. If fraudulent data is entered blockchain is not designed to stop it. Scalability right now is an issue as through-put for transaction completion can be slow (in a computer sense). Processes that take days to complete will get done in minutes.

Although scalability issues need to be resolved transactions are executed more quickly compared to current technology, as third party elements are minimized or removed.

Blockchain and its associated technologies is the next wave of technology for business and will be what businesses will transition to in order to conduct commerce and to remain competitive. As proof points that blockchain will be making an impact on how business is conducted it is not only the small startup software companies that are building products and solutions to support blockchain, but take a look at the large traditional software houses such as Oracle, SAP, IBM, CA, Microsoft, and so on. They are all building practices to support blockchain.

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