How Blockchain Technology is Affecting Business and Finance Sectors

How Blockchain Technology is Affecting Business and Finance Sectors

In the last decade, there has been a growing awareness of the concept of blockchain technology and the many potentials it possesses. While most people often conflate the popular cryptocurrency Bitcoin with blockchain technology, it is essential to note that both are not the same. 

While Bitcoin is powered by blockchain technology, blockchain technology can be utilized for other purposes beyond Bitcoin and cryptocurrencies in general. Additionally, blockchain is a form of a distributed database, while Bitcoin is a type of cryptocurrency.

 

One of the use cases made for creating blockchain technology was because it addressed the issue of trust in financial and like transactions. Most common databases, such as the SQL database, typically have individuals in charge who can alter entries to suit their ends. However, blockchain technology is different because no single person is in charge of entries as numerous people run it, and anyone can easily access transaction records. 

The technology has proven efficient in tackling various modern-day issues ranging from health to data storage, record management, finance, and business. Business and finance are two of the most critical areas that blockchain technology has immensely impacted since its introduction. 

Before delving into the topic properly, it is vital to consider in detail what blockchain technology is all about and the reasons for its adoption in various fields.

What is Blockchain Technology?

A blockchain is a digital ledger or record of transactions spread and duplicated across entire networks or nodes of computer systems on a blockchain. Each block within the chain contains several transactions, and each time a new transaction takes place on the blockchain, a record of such transaction is included in the participant’s ledger. 

The kind of database utilized in a blockchain is regarded as a decentralized database known as Distributed Ledger Technology. Numerous participants run the database, and each transaction is recorded using an immutable cryptographic signature known as hash

As a digital database, blockchain technology stores data electronically in digital form. The innovation is generally acclaimed for its fidelity and security of transaction records generated without the requirement of a third party or intermediaries. 

Reasons for the Adoption of Blockchain in Various Fields

Transparency 

Due to the decentralized nature of blockchain technology, all activities conducted on the chain can be viewed by an interested party. This can be done through blockchain explorers or individual nodes, which allows parties to view transactions as they occur live. Each node keeps a copy of the chain and is constantly updated when new blocks are confirmed and added. 

Records stored on the blockchain are mostly encrypted, allowing only the owner access to the record by decrypting it to reveal their identity. A user can remain anonymous while being transparent. This is done through a public-private key

Highly Secure

Another reason blockchain technology is utilized by different fields is its security. Because it uses a digital feature to execute fraud-free transactions, third parties can't alter or corrupt such records without the specific digital signature. This security attribute is arguably one of the essential aspects of the technology and has led to its adoption by different fields. 

A Decentralized System 

Traditionally, a person needs to obtain approval from regulatory bodies such as banks or governments to execute transactions. However, blockchain technology allows participants to conduct transactions by mutual consensus, leading to safer, faster, and smoother transactions.


Automation Ability 

Blockchain is largely programmable and can be utilized to automatically create systematic events, payments, and actions when the proper criteria are met. 

Impacts of Blockchain on Businesses