Blockchain is still one of the hottest new technologies to hit the business world and has been buzzing across sectors. It is not a wonder why companies are feeling the competition to learn more about blockchain and how to integrate blockchain in their business.
When we hear of blockchain, our mind immediately goes to Bitcoin and Cryptocurrencies. Started back in 1991, a cryptographically secured chain of blocks is described for the first time by Stuart Haber and W Scott Stornetta. Over the years, developer Satoshi Nakamoto implemented the first blockchain transaction made using Bitcoin, this was in 2009. Now Bitcoin is still the most successful cryptocurrency. Along the way, other blockchain like Ethereum managed to closely follow in Bitcoin’s footsteps, being the second largest in the world
Blockchain is listed as one of the key pillars to digital transformation. A report done on digital transformation showcased two notable predictions for 2021: “prominent in-industry value chains, enabled by blockchains, will have extended their digital platforms to their entire omni-experience ecosystems, thus reducing transaction costs by 35%” and “about 30% of manufacturers and retailers globally will have built digital trust through blockchain services that enable collaborative supply chains and allow consumers to access product histories.” (Lal, 2020)
Blockchain does not only safeguard businesses, it also provides efficiency in business systems, operations and strategy. With digital transformation coming hard and fast, there is no way an organisation can survive without embracing blockchain. After all, we are already in a competitive digital era – with emerging trends like Artificial Intelligence and Automation.
But what exactly is blockchain and how does it work? This article will guide you through in simple terms, to understand a little bit better as to what and how blockchain works.
1. Definition of Blockchain
According to builtin, in simple definition, “Blockchain is sometimes referred to as Distributed Ledger Technology (DLT). Blockchain makes the history of any digital asset unalterable and transparent by decentralization and cryptographic hashing”
In layman analogy, blockchain can be described as a Google Doc – in which everyone who is granted access can access the document and make real time edits, which is transparent for everyone to see. Builtin also proceeded on by acknowledging that of course blockchain is more complexed, but the main components of blockchain that is reflected in this analogy are listed below.
1. Digital assets are copied or transferred
2. It is decentralized allowing a transparent and real time access,
3. Lastly, almost every sector can integrate it into their business.
All these components suggest that Blockchain, aside from being a promising technology that will revolutionize the world every step of the way, it also creates a safer and transparent way for various of uses – as it helps reduce risks and detect frauds.
2. How Does Blockchain Work?
Blockchain has emerged as one of the top technological trends for Singapore in 2021, according to the The Singapore Blockchain Ecosystem Report 2020. About 70% of respondents see blockchain as the top technological trend in Singapore. Other top trends are artificial intelligence & automation at 91% and autonomous technology/Internet of Things at 64%. This goes to show now is the time to start understanding why blockchain is so impactful and in trend!
Now that we have understood the definition of blockchain, the next question is how does it work?
In Blockchain, it is important to note that there are 3 concepts:
1. Blocks
Every chain consists of multiple blocks and each block has three basic elements:
1. Data (which is in the block)
2. Nonce (Randomly generated)
3. Hash (A number wedded to the Nonce)
When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined.
2. Miners
As you probably guessed, miners come from the word mining. As previously mentioned, every block is considered tied and locked down – hence mining is incredibly difficult to achieve especially if the block is massive.
There is a special software that miners use for such activities. There are so many probabilities of combinations out there before the ‘right’ one is found. Additionally, if you would like to make changes to the block, you will also have to make changes to the blocks that come after. Therefore reiterating the point that the blockchain technology is safe, and incredibly difficult to manipulate!
3. Nodes
Finally, we will be discussing on Nodes. Earlier on, we learned that the most important concept in blockchain is decentralization, which means it can be copied or transferred but nobody owns it. It is shared amongst people.
Since blockchain is transparent, everyone will be able to see every action made. This promotes a sense of safety, trust, and integrity in the blockchain ecosystem.
We will not be going into too many details on these components, as it might get too technical for us beginners! The most important thing is to roughly understand how blockchain works, for now!
3. Blockchain In Use Cases
Now, here comes the exciting part! How is blockchain integrated and used in various companies? The easiest and most common use case for blockchain is of course cryptocurrencies. We mentioned Bitcoin and Ethereum. Of course, there are many more in the market. Recently, Shiba Inu, also known as DogeCoin’s enemy, also a meme, went up by 30% – shocking but it happened. Welcome to the volatility of the crypto market.
Basically, these coins can be used as a digital form of cash to pay for everything from everyday items to larger purchases like cars and homes. It can be bought using one of several digital wallets or trading platforms, then digitally transferred upon purchase of an item, with the blockchain recording the transaction and the new owner. It is that simple and hassle free. There are so many platforms out there in which people can start their crypto journey as well.
Builtin also shared that “To date, there are roughly 6,700 cryptocurrencies in the world that have a total market cap around $1.6 trillion, with Bitcoin holding a majority of the value”. How insane is that. Imagine investing in Bitcoin 10 years back?
4. How Does Crypto Influence The Market?
Well, it is true that cryptocurrencies can make some people rich. Speculators have been driving up the price of crypto, especially Bitcoin, helping some early adopters to become billionaires. Whether this is a positive has yet to be seen, but regardless, who would not want to be billionaires? Progressively, many large corporations are embracing and adopting the idea of a blockchain-based digital currency for payments. In February 2021, Tesla announced that it would invest $1.5 billion into Bitcoin and accept it as payment for their cars. Of course, blockchain goes beyond Bitcoin and cryptocurrencies.
5. Internet of Things (IoT)
The Internet of Things (IoT) is the next progress in blockchain applications. IoT has millions of applications and many safety concerns, and an increase in IoT products means better chances for hackers to steal your data on everything from an Amazon Alexa to a smart thermostat. IoT basically connects you to your device, with other devices. It’s like an ecosystem where everything is linked. But of course, when this happens, it is the same concept as putting all your eggs in one basket. The risk is high. Therefore, blockchain-infused IoT adds a higher level of security to prevent data breaches by utilizing transparency and any breaches of the technology to keep things “smart.”
Conclusion
The world is moving forward, and if organisations choose to remain stagnant, they will be left out and inevitable vanish from the market. Whether an organisation is ready or not to embrace and adopt blockchain is not the questions. Rather, organisations need to react now and make a decision to progress before it is too late.
Hence, employees and higher-ups must all learn what blockchain is and gain at least the basic and fundamental understanding as to how blockchain can be successfully used in businesses, and how it can help businesses thrive for many years ahead.
Covid-19 has accelerated digital transformation in many sectors, across the world. Now is the time to start! To prevent future crisis which will drastically affect businesses, businesses must now plan to Covid-proof their strategy so they may continue to flourish.
Kick-start your Blockchain Journey With Us!
Well, if you are passionate and keen to venture more, Aventis Learning Group has got your back! On that note, if you would like to learn more on blockchain and how to successfully apply it in business, we have a course that is designed by experts for you!
This Blockchain For Business Application & Strategy is designed to help learners discover and explore the world of business Blockchain. Learners will also explore how to incorporate Blockchain into existing business strategies as well as discover potential uses of Blockchain for their business.
For more assistance, please do not hesitate to contact Ms Adriana at (65) 6720 3333 or training.aventis@gmail.com
References
35 Blockchain Applications and Real-World Use Cases Disrupting the Status Quo
