Blockchain offers better protection of sensitive data due to decentralization. The technology can be applied to many industries, but it's important for companies to examine its benefits and downsides to determine if it's right for them.
According to Coindesk, a website that covers the growing and much-speculated Bitcoin market, Apple recently filed for a patent that indicates the technology giant might be moving toward the use of blockchain technology.
Blockchain is the technology behind cryptocurrencies like Ethereum and Bitcoin. With Apple signaling a move to utilize this innovation, it looks like more widespread use of blockchain is on the horizon.
What need does it fill?
Blockchain was created to better protect sensitive data. The companies we interact with every day collect tons of data about us. This information is usually stored in databases, and recent security breaches have shown that consumer data is often not secure.
Just last month, it was revealed that Alteryx Inc., a marketing and analytics company, accidentally publicized the personal information of 123 million American households. According to the Identity Theft Resource Center, the recent data breach was one of nearly 1,300 breaches that occurred last year, up from 2016's total of 1,093.
Despite these breaches, data is a $300 billion industry, so businesses are looking for new ways to secure the data they collect. For many businesses, blockchain technology is a good fit.
Blockchain offers an alternative for storing and transferring data. Many believe it offers superior security and privacy because the data it contains is decentralized. Blockchain uses encryption software to scramble data so that only certain users can access it. The data is linked across computers connected on a network.
This technology can be applied to many industries, but it's important for companies to examine its benefits to determine if it's right for them. Experts say blockchain is poised to disrupt the way business is conducted in a variety of industries, public institutions and even at the governmental level.
Decentralization increases security and flexibility.
With blockchain, businesses have the added security that comes with decentralization. A block, which is a list of records that contain a timestamp and digital signature, is linked to each block before it, making the digital ledger nearly incorruptible because all the blocks would have to be altered, not just one. This technology can especially benefit businesses that store a lot of sensitive data. The chances of a security breach are little to none because data is not stored centrally, and therefore cannot be corrupted by hackers.
The technology can offer more flexibility for businesses that want to utilize a secure infrastructure as a service (IaaS) company so they aren't limited to the bandwidth of their own physical infrastructure. In addition, outages can be minimized by decentralizing storage and services.
Smart contracts boost efficiency.
Another benefit of the software is smart contracts. With blockchain, companies have a secure way of making transactions with consumers directly. This eliminates the need for third parties that usually serve as intermediaries, like financial institutions. With blockchain, companies can be self-sufficient. Smart contracts aid businesses by cutting out middlemen and making processes much more efficient while saving costs, especially legal and financial costs.
Blockchain is still new technology.
The technology is still fairly new, and there are some downsides that aren't as widely discussed as the benefits. Just as the value of Bitcoin recently took a hit, the stability of blockchain networks hasn't been highly tested. Reports indicate that blockchain software doesn't yet measure up to some processing competitors.
As mentioned in the Netflix documentary "Banking on Bitcoin," when processing a large number of transactions, blockchain is currently much slower than financial institutions like Visa or Western Union. The documentary says Western Union conducted a test and found that, while its transactions peak at 750 per second and Visa's peak at 25,000 per second, Bitcoin's peak transactions are only seven per second. This leaves a lot to be desired for companies handling a large number of customers and transactions.
But the power of blockchain is that its performance has the potential to increase as it is more widely adopted. This means that the more businesses begin using blockchain to secure their data and conduct transactions, the better blockchain will be able to perform these functions. And it looks like many have already begun to recognize the power of blockchain and trust it.
According to recent reports, companies that added "blockchain" to their names saw the value of their share prices increase by leaps and bounds. Shares in an American beverage manufacturer increased by almost 500 percent the month after the company announced it would be adding the word "blockchain" to its name.
Sure, this information should be taken with a grain of salt. There's a lot of buzz surrounding blockchain due to the hype around cryptocurrency, and it's unclear whether that will prove sustainable over time. But the share price spikes are indicative of the power of this innovative technology for businesses. Not only can it change the way businesses function, it's already changing the way many people think.