Over the past 30 years, financial institutions have funded the transformation of various industries; they have an awareness and appreciation of what any new innovative technology can do to stagnant incumbents.
Therefore, in the race of staying ahead, several banks have been aggressively in setting up R&D centers, establishing test centers and developing alliances with blockchain pioneers to fully comprehend the technology’s revolutionary potential.
As a matter of fact, the Financial institutions were among the first to dive in, but later on, the technology was also explored by universities, government institutions, and consulting firms. Know how blockchain is changing the finance industry.
Of course, all this work which is happening is in addition to what other businesspeople and developers are carrying out, either through figuring out new ways of using the bitcoin or the ethereum blockchains or by developing completely new blockchains.
It’s been almost three years since all of this started and the results are beginning to come in and they look good!
Even though some waters are still dark, we know that a blockchain can do this:
- Establish A Digital Entity
By using cryptographic keys, the identity element of blockchain technology is filled. The combination of a public and private key creates a strong, possession-based, digital identity link.
A public key is a way you are known in the crowd (like an email address), how you convey your consent to electronic incorporation is a private key.
Public Key + Private Key = Digital Signature
As mentioned in our previous blogs, blockchains are a technological advancement in the registration and dissemination of information. They are pretty great for documenting both static (a registry) and dynamic (transactions) data, thus, making it an evolution in recording systems.
In the case of a registry, there is a combination of three ways by which the data can be stored on blockchains:
- Unencrypted Data: This is the kind of data that can be read literally anywhere by any participant of the respective blockchain & the data here if fully transparent.
- Encrypted Data: This data, is only and only visible to & can be read by the participants who have a decryption key. This key allows the user to access the data on the blockchain & also can prove who added the data, and then the data was added!
- Hashed Data: This data can be presented alongside the function that created it in the first place, to show that the data was untampered.
Blockchain hashes are usually done in tandem with the initial off-chain data stored. For instance, electronic’ fingerprints’ are always hashed into the blockchain, while the key data body can be preserved offline.
Such a shared recording system can completely transform the way organizations work together in different ways.
Presently, with data being siloed in private servers, the cost of inter-company transactions including processes, procedures and record cross-checking is enormous.
- Provide Immutability
An impressive blockchain database feature is that it has its own history. For this reason, they are often referred to as immutable. In other words, modifying an entry in the database would be almost impossible or will require a huge effort, because that would entail modifying all the data that comes on each single node afterwards. It’s more of a storage system than a database in this sense.
- Serve As A Platform
The first platform to be developed with the help of blockchain technology was Cryptocurrencies. Today, people have jump passed to blockchain being a platform for smart contracts from rather then just being concept of a network to trade cryptocurrencies.
The word ‘ smart contracts’ has matured to a catch-all expression, but the concept can be divided into several categories:
There are the smart contracts ‘ vending machine’ which were coined by Nick Szabo back in the 1990s. This is the place where all machines actively participate after receiving an external input (a cryptocurrency) or send a signal that triggers the activity of a blockchain.
Then there are also intelligent legal contracts, or contracts with Ricardi. Most of this application is based on the notion that a contract is mindset compatibility, and that it is the product of whatever the contracting parties agree to. A contract can, therefore, be a combination of verbal, written, and now also some of the useful features of blockchains such as timestamps, tokens, auditing, synchronization of documents and business logic.
And finally, we have our ethereum smart contracts are in place. These are the programs that monitor blockchain resources, implemented over the ethereum blockchain’s interactions. Ethereum is itself a smart contract software system.
Thus, we can say that blockchain is an amazing piece of technology which can be utilized by everyone at different places, to make things easier & better. This technology is constantly being explored by people, and getting better for good.