Blockchain technology can serve a wide range of functions both in the crptocurrency arena and other industries. Its multifunctional ability has contributed to its popularity and wide application in different industries.
Below is a highlight of some of the functions that blockchain technology can serve.
- Record and Distribute information.
Blockchain technology integrates distributed ledgers that enable a synchronized distribution of information across all members of the network. This functionality has been central in crptocurrency transactions. It can be adopted by governments in recording and distributing citizen information as well as in corporate 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 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 profit margins.
- Promote 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 greatly help in ensuring transparency in logistics, procurements, tracking goods and services and in accounting.
- Offer database and network security.
As the system is decentralized, there is no single failure point. Even if one or a few nodes break down, the rest would still be functional. Bitcoin protocols are evident that blockchain technology offers 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 the kind of activities that can be carried out in the network.
The blockchain system is setup 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.
- Serve as a platform for transactions.
Other than serving as a platform for transacting bitcoins and other cryptocurrencies, organizations can customize blockchain software to enable them transact their goods and services.
- Digitize 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 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 patients’ records which are synchronized and shared 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 and risk data loss incase 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 difficult to manage. Since some of this data is centralized, it can be frustrating for 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 can offer more efficiency in organizing and accessing citizen information.
More research is being carried out to investigate more functions of blockchain technology. While some industries have already implemented the technology, many more continue to explore how it can be implemented in their operations. Ultimately, it is clear that blockchain technology will in the coming decades play a critical role in how business and organizations operate.