Potential applications for this technology go far beyond finance and money transfers: Some experts see applications for everything from supply chain management and real estate transactions to personal health records and voting.
Banks are already exploring the potential of blockchain
While blockchain technology is still in its infancy, the financial industry is exploring ways to leverage it to improve transactions. For example, banks are looking to use smart contracts to meet regulatory requirements and automate processes across the value chain. According to McKinsey, this could reduce costs by up to $15 billion a year.
The technology also has other potential uses for banks and insurance companies besides insuring the bitcoin price :
- Banks are looking to blockchain as a way to improve their efficiency by making it faster and cheaper than traditional payment systems like Swift or VisaNet.
- Insurance companies are exploring how to use the technology’s ability to allow third parties (such as reinsurers) to access data without compromising privacy.
Blockchain technology could reduce costs by eliminating the need for third-party intermediaries, which currently provide trust and validation in financial transactions. For example, it has been reported that blockchain has already reduced transaction costs for trade finance by up to 60%.
Smart contracts could be one way to enforce compliance
The smart contracts they are a means of enforcing compliance. Simply put, a smart contract is a set of rules stored on the blockchain and executed by the network. Smart contracts can be used to enforce regulations while providing a transparent record of transactions. For example, when two parties enter into an agreement (e.g. one party provides goods or services in exchange for a payment), smart contracts can be used to ensure that both parties fulfill their side of the agreement. This helps prevent fraud and ensures that both parties fulfill their obligations under a given agreement.
This data is safe from hackers as it is encrypted and copied over a worldwide computer network.
In the case of blockchain, this decentralized data is even safer from hackers because it is encrypted and copied across a worldwide computer network. In other words, it’s virtually impossible for hackers to gain access to all copies at once. It would be like trying to hack all the computers in the world at the same time with just one computer!
That’s why businesses are turning to blockchains: They offer an efficient way for businesses and customers to work together without relying on third-party intermediaries like banks or governments that could potentially go bankrupt or act without accountability.
A super storage and a database
The system enables asset registration, identity management and other archiving services on a shared ledger that all participants can see, meaning that trust is not established by a central authority but through mass collaboration and smart software.
Blockchain is generally described as a distributed database or shared ledger. The most common analogy for this technology is the accounting medium of double-entry accounting, where transactions are recorded in two places: one copy in the journal (a centralized ledger) and another in the general ledger (a distributed ledger). Double-entry bookkeeping was an important innovation in the late Middle Ages because it enabled merchants to track their business activities more efficiently than ever before: it reduced human error while ensuring accountability against fraud.
The blockchain technology it might determine that an applicant meets certain criteria before HR employees process a job application or before payroll managers authorize a payment. Or perhaps it will be part of the process of ensuring things like food are safe to eat.
It also paves the way for automating processes that would otherwise require tedious manual checks and approvals; imagine, for example, how smart contracts allow payments or actions to take place automatically once specific criteria are met.
Smart contracts are computer programs that automatically execute the terms of an agreement or transaction when certain conditions are met. They can be used to automate routine processes, automatically transfer money between parties and manage the transfer of assets.
The blockchain, multiple applications for companies
A blockchain maintains an ever-growing list of records (or blocks). Each of these “blocks” has a timestamp and transaction information. The peer-to-peer network validates new transactions and ensures they don’t contain errors or alterations before storing them on the blockchain. Because they are decentralized, blockchains cannot be controlled by a single entity or group of entities, making them ideal for recording financial transactions and other types of data that need to be verified by multiple parties (such as legal contracts) but do not require the supervision by an authority such as a bank or government agency.