Blockchain, as the name implies, in non-technical language, can be simply explained as a chain of "blocks". These blocks are a list of records of transactions between two parties that are secured and linked together using cryptography. Every single block contains details like transaction data, a timestamp and a cryptographic hash of the previous block. More technically, blockchain is a digitized, decentralized and public distributed ledger in which cryptocurrency transactions are recorded in chronological order.
Bitcoin was originally created to service bitcoins, this has led to the misconception that blockchain and bitcoin are one and the same. This is not so as other blockchains significantly different from Bitcoin have since been developed. Moreover, unlike Bitcoin, some of them are not electronic money systems; examples of such include Hyperledger and R3 Corda. In fact, the numbers of blockchain systems, which exist today, are in excess of a thousand. Although, the major use of blockchains is as a distributive ledger for cryptocurrencies, most notably bitcoin, this technology is currently revolutionizing how business is transacted, especially online.
Some ways by which blockchain is already affecting our economic lives and would determine our financial futures include:
- Smart Contracts: With the aid of blockchain, it would no longer be necessary to have checks and crosschecks on contracts. Blockchain provides a system through coding which enables the contract to be executed automatically immediately the necessary terms are met. An example of such blockchain is Ethereum, which was designed specifically for that purpose. Most importantly, these contracts are unbreakable.
- Accounting and Auditing: The concept of blockchain more or less renders the need for an auditor redundant, except maybe in the investigation of controls and anomalies. This is because with blockchain every transaction carried out in an organization is transparent and available to every staff of the organization from the management staff to the cleaning staff.
- File Storage, Safety and Use: Files become immune to hacking or loss when such data are distributed throughout the network. Decentralizing the storage of data ensures its safety as well as improves the ease of access to it. A distributed data network will also benefit the transfer of files including streaming times, as it will significantly reduce the time taken to effect a transfer from one point to another.
- Protection of intellectual property: The easy reproducibility and proliferation of information on the internet has long been a headache to copyright owners, as it makes it difficult to profit from their intellectual property. However, blockchain in the form of smart contracts might just be a permanent solution to that dilemma. Copyright owners can have their creative works and other intellectual property sold online with the proceeds being automatically remitted to them, thereby eliminating the issue of illegal file copying and redistribution.
- Data Management: Most huge companies require the data harvested from online activities of internet users to determine how best to streamline their services to meet the needs of their customers. With the use of blockchain, internet users would be able to monetize the data their online activity generates. And to ensure transparency and smoothness, an electronic money blockchain such as bitcoin would probably be employed as the currency for such transaction.
- Governance: The complete transparency and public accessibility of blockchain would serve perfectly in eliminating election fraud and riggings. It would bring total openness to polls generally, regardless of its size or purpose. And because it also functions on a distributed database technology, any interested party or individual can verify the result as well as the process of such polls. In terms of organizational systems, digital assets and information can easily be monitored and managed.
This list is in no way exhaustive as the benefits that blockchain bestows on business continue to pile up by the minute. It is safe to say blockchain is no longer the currency of the future;it is already a part of our lives.