Introduction

Blockchain technology has become a viral sensation in the tech space, but many people still do not understand what it is, can do, and how it works. Usually, when blockchain is mentioned, people’s minds go to cryptocurrency and NFTs. While those are based on this technology, blockchain can do so much more. This article explains what blockchain is, the institutions that use blockchain technology, and why you should care about it.

Ready? Let’s dive right in.

What is blockchain?

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Blockchain is a digital ledger or record of transactions distributed across many networks. It is a technology that enables us to store data that cannot be altered.

Data stored on the blockchain is structured into a chain of blocks with each block containing a bundle of information or transactions. When each block is filled, it is strung to previously filled blocks and storage continues in a new block – hence the name, blockchain.

Information on the blockchain is stored using the principles of cryptography and decentralization.

Cryptography is the study of secure communication techniques whereby the only people with access to the information are the sender and the receiver while decentralization is the transfer of control over something from a single or central organization (like say the government or the central bank) to several local authorities. So, information stored on the blockchain is safe and cannot be tampered with.

Institutions that use Blockchain

People quickly assume that we are talking about bitcoin when we talk about blockchain. Blockchain is not bitcoin. However, blockchain is the technology on which bitcoin and other cryptocurrencies are built. Some people also think that cryptocurrency is the only thing blockchain is used for. There are other institutions whose transactions can be stored on the blockchain.

Some of them include:

Banks and financial organizations

Blockchain technology enables banks to handle transactions directly and keep better track of their transactions. It helps for faster payments as there are no middlemen and there are fewer processes to take for verification. So, the organization offers better and more secure services with the aid of blockchain.

Healthcare institutions

Blockchain enables healthcare institutions to provide more adequate and high-quality services to patients. In the medical field, the privacy of the patients is paramount and this technology ensures that medical records of patients are kept and can be transferred safely. The drug supply chain is well managed too. All healthcare and electronic data are protected.

Original content creation

Some companies use blockchain technology to ensure that their content creators get paid for their efforts. So, as a content creator, you do not have to worry about the platform keeping your money. You get to use the level of awareness the platform creates as well as keep the revenue generated. Not only are content creators in control of their revenue from these platforms, but they are also fully in control of their content using this technology. They decide what, how and who views their work.

Voting Mechanisms

This technology changes the voting scenery completely. For one, apathy (total lack of interest) is reduced – that is, with the means to vote easily accessible on one’s phone or computer, people are more inclined to vote. Also, with the kind of security blockchain comes with, data collected from these votes can never be altered, thus solving the problem of electoral malpractice.

Non-fungible Tokens (NFTs)

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Blockchain ensures the security of NFTs seeing as they are built using cryptography. Owners have identification keys for their tokens that distinguish them from others.

And the list goes on and on and on.

Although blockchain is a new concept, its impact can be felt in most aspects of technology today.

Pros and Cons of Blockchain Technology

Some benefits of this technology are:

• Accountability and transparency

The blockchain is not controlled by a central body and transactions on the blockchain are solely between the sender and receiver (no middleman). Information and data are stored in multiple networks and people with access to the transaction see the same thing everywhere

• Increased efficiency and speed

With blockchain technology, transactions are completed faster and with fewer errors, unlike traditional methods of carrying out the same transactions.

• Improved security

Information stored on the blockchain cannot be altered or hacked because of the principles of cryptography employed.

Despite its good sides, this technology is not devoid of errors.

Some disadvantages of blockchain technology are:

• Private Key issues

When you create a cryptocurrency wallet (using Trust Wallet for instance), you receive your private key and you are advised not to misplace them. If stolen, your assets are at risk and if lost, you will not be able to sign in to that wallet again.

• Lack of skilled developers

As this technology broadens, the need for communities and resources for blockchain development increases.

• Data immutability

Everyone is entitled to their privacy. With blockchain, any information that is put out is immutable (I.e cannot be changed or removed) if the person wants it removed.

• Scalability

This is the ability of a system (blockchain network in this case) to be changed in size. The sizes of blocks on the blockchain are fixed and thus are unscalable. According to coinmarketcap, the size of a block on the blockchain is 1MB. This means that the blocks get filled up quickly and that results in slower transactions because the network is overloaded with transactions.

• Immaturity

Blockchain technology is about a decade years old and has a long way to go in development. This is one of the reasons why people do not completely trust it and are not investing in it right now.

Conclusion

One major importance of this technology is that it aids transparency and accountability wherever it is applied. The technology is doing great right now and over time will do even better and win the confidence of a lot of people.

Blockchain is a very vast subject matter and this piece does not even do justice to it. However, if you are looking to begin your quest in understanding what blockchain is and can do, then this article is a good starting point for you.