Blockchain is a technology which is becoming more and more popular, and many startups are springing up that have recognized the potential of blockchain. Even global corporations understand that they have to deal with this, even though their business is not based in IT. But as everywhere, it is essential...
Blockchain is a technology which is becoming more and more popular, and many startups are springing up that have recognized the potential of blockchain. Even global corporations understand that they have to deal with this, even though their business is not based in IT. But as everywhere, it is essential to weigh up: ‘Advantages of Blockchain.’
What are the advantages of the blockchain?
Decentralization
The fundamental property of decentralization offers an obvious advantage. No central person is responsible for the network, but all participants have equal rights. The database is distributed, so each participant always has a synchronized, up-to-date data version. Note: The distributed database should not be confused with distributed systems such as HDFS, designed to process gigantic data sets.
Tamper-proof
Due to secure encryption methods, another significant advantage is the protection against manipulation. There are unique validation and authorization mechanisms throughout the network. Forgery-proof mathematical processes make the data in the blockchain reliable and trustworthy. Integrity is assured as thousands of nodes validate every blockchain transaction.
There is also only one single source of truth. Any unauthorized change in the network is immediately disclosed to be sure of the correctness. In any case, the data in the blockchain can be classified as high quality: it is complete, consistent, timely, accurate, and always available.
Failsafe
The decentralized data storage with countless replications leads to a massive failure in safety. A single source on which the data is located represents a so-called ‘single point of failure.’ Because a loss of this data source automatically means that no data queries are possible until the error is rectified.
Cyber attackers can intentionally cause such failures. In the provider’s bankruptcy or natural disasters, there is even a risk that the data will be lost permanently. Redundant storage at all participants in the network protects against failures and data loss.
Direct transactions
The blockchain enables direct transactions among the participants without needing a third party to intervene. These ‘middlemen’ such as banks or notaries are no longer necessary.
This technology is beautiful, especially in regions where the infrastructure is not yet fully developed or where there is a lot of corruption. Participants can rely on tamper-proof transactions.
Bypassing these middlemen and doing business directly also reduces this intermediary’s costs. In addition, the direct transaction is often much faster.
A maximum of 10 minutes is required in the Bitcoin blockchain, but it can take a few days via third-party systems.
Optimized business process
Business processes can be optimized in IT, finance, administration, and many areas of the company: faster processes and higher quality at lower costs are feasible. The blockchain enables simple tracking in logistics and production processes. Vulnerabilities in supply chains are automatically revealed.
Cross-company analyzes of data can be carried out using this technology. This gives those responsible in the company more precise insights into the market situation and enables them to make better decisions.
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