Financial Technology

Understanding the Impact of Blockchain

Blockchain is poised to have an enormous impact on how data is recorded and shared across the internet. In short, blockchain is a distributed database, like one giant spreadsheet shared by a massive series of computers the world over. 

The important difference from databases now is that this technology is not a centralized system controlled by one organization. Rather, any information is stored as incorruptible blocks that are accessible from any node on the network, chained together with a peer-to-peer system that’s safeguarded by automated cryptographic methods. The data shared is continuously recorded in an unalterable form, allowing for transparency. 

This allows for a secure, effective way to share data from person to person without relying on third parties for verification or distribution. When adopted, this technology will have major impacts on existing systems.

It Starts with Transactions…

The most obvious effect will be on digital financial transactions. Blockchain will provide secure connections capable of transferring important, verified data, such as currency. There will be no need for centralized authorities, like banks, to validate transactions. Individuals will be able to transfer funds securely from one person to another. This can transform the way the sharing economy works, having great stakes on companies like Uber and AirBnB, which act as third-party services to connect individuals. 

But data is data, and currency is only the start. Blockchain could potentially solve logistics and fulfilment problems. Records, legal documents, and virtually any other information that can be coded into 1s and 0s can be transferred using this technology. This could affect the way governmental records are stored and used, and perhaps one day, even the way we vote.

A Faster Kind of Cloud

Decentralizing file storage into the blockchain system has many benefits. The first is that the data becomes protected from files getting hacked or lost. There’s also the potential that completely decentralized information can make websites faster. It can also speed up file transfer and streaming times, which will be advantageous to streaming services like Netflix and iTunes.

IP Protection and ID Management

Digital information—including mp3s, video files, and jpegs—is infinitely reproducible, which means it’s infinitely distributable as well. While users are finding a golden era of content, copyright holders are struggling to maintain control of their intellectual property. Blockchain can offer smart contracts that can protect copyright and automate the sale of creative work. 

At the same time, this technology can better manage identities across the internet. The embedded cryptology nature of the technology means you can securely identify yourself and others. Developing digital identity standards is complex and by no means solved. But in the future, instead of having your personal data stored with large companies like Facebook or Google that can turn around and sell your data, you’ll be able to manage your information directly.

Governance and Transparency

A key element of blockchains is that all changes or additions to a block are kept indefinitely, and they’re always publicly accessible. Algorithms are deployed to ensure all this information is stored chronologically, permanently, and available to all users. This full transparency will have many positive effects towards governance of digital assets, equity, and information. Time will tell how people and organizations react to a higher level of transparency. 

These are just some of the impacts blockchain can and may have on existing systems. Blockchain is capable of making a world where all data is embedded in code and stored in shared, transparent databases that are protected from deletion, tampering, hacking, and revision. 

The technology is in its infancy now, but as more and more startups and big businesses consider the possibilities, you too should be prepared to work, create, and build within a distributed database.

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