Understand what blockchain is and how it works
What is blockchain?
A ledger that is shared and always recorded plus shows the full history of any transactions – theses transactions cannot be altered.
Why do we need it?
Transactions take place every nanosecond all around the world for orders, payments, account tracking and more. Often each participant has their own ledger and their own version of the true transaction. Having multiple ledgers, in multiple places, with multiple timestamps has massive room for fraud and inefficiencies. The precise way would be to see a transaction end-to-end and reduce those problems.
How does blockchain work?
Transactions are complex.
• Each company or participant has their own, separate ledger which in turn can increase the possibility of fraud
• Have 3rd parties or other intermediaries for validation creates in further inefficiencies
• Transactions can be a paper-laden process, which resulting in frequent delays and potential losses for all
Blockchain makes it better
• The single shared ledger that can shoe if tampering has happened at all points of the transaction.
• Once recorded, transactions cannot be changed
• All companies and parties involved in the new transaction must agree before this is added to the network
• This eliminates and reduces paper processes almost completely
• Speeds up transaction times and increasing efficiencies
Building a blockchain.
- As each transaction occurs, it’s put into a block.
- Each block is connected to the one before and after it.
- Transactions are blocked together.
- Each block is added to the next in an irreversible chain.
The benefits of blockchain are critical to enterprises.
The blockchain works as a system of records that are shared among multiple participants in the network, eliminating the need to reconcile multiple ledgers in different places and different times.
Each member in the connected network has access rights so that confidential information is only shared with the people on a need-to-know basis.
The blockchain works in a consensus and it requires all network members and all validated transactions are permanently recorded. No one, not even a system administrator, can delete or edit any of this transactional data.
Let’s see how this could work in the industry.
Take the idea of mining precious stones around the world. Let’s take a concept like tracking diamonds from mine to the customer this is a massively complex problem. Diamond smuggling, counterfeit diamonds and unethically mined stones are real challenges for all diamond buyers. With blockchain, it’s possible to:
- House a record of super high-resolution photos of each diamond at every touchpoint along its journey.
- Track real-time payment transaction and records of every step via the blockchain.
- Document, record and hold a certificate of authenticity.
- You can maintain product details like cut, clarity, colour, carat and diamond serial numbers.
Blockchain can enable enterprises across many industries to:
- Free up capital flows
- Lower transaction cost
- Speed processes
- Provide security and trust