Blockchain technology can serve a wide range of functions both in cryptocurrency arena and other industries. It multifunctional ability has contributed to its popularity and wide application in different industries.
Below is a highlight of some of the functions that blockchain serve.
- Record and Distribute information. Blockchains integrate distributed ledgers that enable a synchronized distribution of information across all members of the network. This functionality of the technology has been central in cryptocurrency transactions.it can be adopted by governments in recording and distributing citizen information as well as incorporate institutions in finance, banking, logistics, and healthcare industries. Since the system uses sophisticated information distribution technology, information is distributed instantly upon being recorded.
- Help organizations save on networking and database management infrastructure. According to an IBM, the cost of setting up a blockchain system in an organization is on average $1 million dollars. This may seem like a high cost. However, blockchain technology significantly reduces the costs involved in setting up and maintaining a centralized database. It also offers high performance increasing efficiency, therefore, increasing output and consequently increasing profit margins.
- Promotes transparency. Data once recorded is broadcasted to all nodes at the same time, and it cannot be changed without all members’ consensus. This function can significantly help in ensuring transparency in logistics, procurements, tracking goods and services and in accounting.
- Offers database and network security. As the system is decentralized, there is no single failure point in the system. Even if one or a few nodes break down, the rest would still be functional. Bitcoin protocols are evident that blockchain technology offers a high level of security as the network has never been hacked. While hackers could get access to private keys of one of the nodes, the rest of the system would still remain secure.
- Restricts kind of activities that can be carried out in the network. The blockchain system is set up with a consensus algorithm that determines the kind of activities that can be carried out in the network. The consensus is coded into the network as a smart contract which activates automatically once the conditions for a trigger are met.
- Serves as a platform for transactions. Other than serving as a platform for the transaction of bitcoins and other cryptocurrencies, organizations can customize blockchain software to enable them to transact their goods and services.
- Digitizes assets. Cryptocurrencies are electronic digital assets that are managed and transacted through the blockchain technology.
- Create digital identities. Blockchain technology incorporates cryptography which enables for the creation of digital identities that require digital signatures to verify and authenticate actions of members within a network.
Application of blockchain technology in different industries
Due to the broad functionality of blockchain technology, it can be adopted in various industries including:
Healthcare: blockchain technology can be used to create a private network for keeping patient records which are synchronized among high stake members of the network.
Procurement and supply chains. Blockchain will promote efficiency in supply and procurement chain management as it allows for transparency in tracking goods and recording transactions.
Entertainment and media. Media companies and entertainment companies have a wide database of news, posts, information, music records, and footage. Many of these databases are centralized are risk data loss in case of a fault. A decentralized private blockchain system will enable better data security.
Energy industry. In the energy sector blockchain technology can be implemented to improve efficiency in billing, metering, maintaining customer records and emission allowance management.
Government institutions. Governments are responsible for maintaining citizen records in regards to voting, taxation, property transfers, birth dates and marital status among others. Such huge amounts of data can be challenging to manage. Since some of this data is centralized, it can be frustrating for a citizen to move from one local government to access records. Blockchain technology can help governments to decentralize such records so that they are available in all local government offices across the country. In addition, it will offer more efficiency in organizing and accessing citizen information.
More research is being carried out to investigate more functionality offered by blockchain technology. While some industries have already implemented the technology, many others continue to explore how it can be applied in their operations. Ultimately, it is clear that blockchain technology will in the coming decades how business and organizations operate.