Blockchain technology is completely transforming the way digital transactions are made. The effects of their arrival are such that it can change the way vastly different industries carry out their daily activities. In the same way that blockchain technology makes it possible to exchange money in bitcoins or MBTC, it also allows the transfer of intellectual property.
Deepening the concept of blockchain technology
By allowing digital information to be distributed but not copied, blockchain technology has helped create the backbone of a new type of Internet.
However, there is a lot of confusion regarding this new advance and what it represents, so before defining what blockchain technology is, it is necessary to understand what it is not:
- The blockchain is not cryptocurrency. Many confuse it with Bitcoin, and the error arises from the fact that this cryptocurrency was the first blockchain application. However, this technology can be used to maintain a reliable audit trail of a wide range of asset types, both tangible and intangible, from everything related to the company vehicle to financial instruments, videos, or documents.
- The blockchain is not middleware. It is not a layer on which to develop new business solutions. Still, this technology the end in itself, and its usefulness comes from an appropriate set of applications built on it.
- The blockchain is not necessary in all cases, nor is it presented as the best option in any circumstance. When there is no business network, it is preferable to opt for more adjusted solutions to real needs, such as a distributed database.
The blockchain is not necessarily anonymous. According to the choice of fabric, blockchain technology can support anonymous transactions in an “unreliable” network. However, it prioritizes identity over anonymity in everything related to business to provide greater reliability to processes.
According to MIT, blockchain technology is a mathematical structure to store data that is almost impossible to counterfeit. It can be used for all kinds of valuable data.
How blockchain technology works
One of the main benefits of blockchain lies in its transparency since it works as a living chronicle of all the transactions as equals. One of the similes that best explains the operation of Blockchain is the one published in Startup Management, where this technology is compared with Google Docs.
The traditional way of sharing documents was to send a Microsoft Word document to another recipient and ask him to modify it. The problem with this scenario is that you had to wait until you received a return copy before seeing or making other changes since it was impossible to edit it until the other person had finished.
But nowadays, immediacy is a rising value and, therefore, there are already business applications that allow different users to access and update the same registry at the same time. One of them is Google Docs, which replaces Microsoft Word in collaborative environments, allowing all interested parties to simultaneously access the same document, conserving a single version of the document that is always visible to all. In addition, you can also access a history of changes to understand how the updates have been practiced.
The drawbacks of Blockchain
Blockchain has its problems. For example, everyone should have a copy of the blockchain database that becomes slower and slower over time, a problem for which they are starting to look for solutions.
Another drawback is that the blockchain management process involves high energy consumption and complex calculations, which must be linked to some economic counterpart, so the transactions will always have a financial purpose.
Immutability is one of Blockchain’s strengths, but it also has a high cost. It’s precisely what makes data storage so great, but it causes transactions to slow down as requests grow.
A very logical disadvantage has to do with the development of Blockchain, which is complex. It’s not like updating a web page to get all your visitors to see the change instantly, but, as far as Blockchain is concerned, most nodes must agree to the update.
Finally, it should be noted that there is still a lot of centralization in the existing Blockchains, too many points imposed by the central authority, and that reduces the security of this technology.
Why Blockchain is needed
Point-to-point connectivity through the Internet has existed for quite some time in several different formats, allowing the distribution of digital assets directly from one person or company to another. But using blockchain implies some added advantages since this technology distributes a public record of all transactions made and confirms a block before each of its transactions can be finalized, eliminating any possibility that fraudulent activities are given.
Intermediaries disappear, and control increases, so reliability is guaranteed. Blockchain has come to the forefront due to its role in the distribution of cryptocurrencies like Bitcoin. However, in the long term, these digital transactions will only be a small part of the global footprint of blockchain technology in the way we transfer assets into line.
The possibilities for blockchain implementation seem endless since its underlying technology can be used in practically any field to perform a series of tasks ranging from the execution of contracts of sale to the distribution of important medical information.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.