Blockchain Technology is the new trendsetter in financial ledgers and transactions. And this new type of method of recording financial transactions has created quite a stir among governments and organisations due to its ability to track and record financial transactions. Also, all transactions carried out through Blockchain are so secure that it is nearly impossible to hack, change or cheat this system. So, what’s the deal with this brand-new technology? How might this benefit you? Read on to find out these answers and much more in this blog.

What is Blockchain technology?

Distributed Ledger Technology (DLT) is another name for Blockchain. It makes the use and history of any type of digital asset traceable, transparent and unalterable through cryptographic and decentralisation hashing. Blockchain was first introduced by a Japanese person named Satoshi Nakamoto to make transactions through Bitcoin traceable through public domains.

One way of understanding Blockchain technology is through the use of Google Docs. In Google Docs, a document can be shared with a group of people without it being copied or transferred to each of them individually. This makes changes to the document transparent.

Although Blockchain technology works more complicatedly than Google Docs, the idea remains the same. A blockchain is a shared and immutable ledger that facilitates recording financial transactions and helps track assets in a business network. Cash, land, or even a vehicle can be used as an investment. A blockchain network makes it possible to track and trace any item of value. This helps reduce the risks associated with transactions getting lost and helps cut costs.

How does blockchain technology work?

Blockchain collects information about financial transactions in certain groups that are called blocks. This creates a chain of data in blocks called Blockchain.

This data structure with blocks, when once filled with information, becomes decentralised in nature. When a particular block is filled, it becomes a part of the timeline of blocks. And each block in the chain is given an exact timestamp and thus gets added to the main chain.

Why is Blockchain Important?

All types of businesses run on different types of information. The faster this information is received it becomes accurate. Thus, Blockchain is ideal in delivering that type of information as it helps to provide shared, complete and immediate communication stored on a ledger. Blockchains can track payments, orders, production, accounts and much more. And since this information is transparent, all members can view the truth. This gives users more confidence and provides new opportunities and efficiencies.

Moving on, let’s look at the key elements of blockchain technology.

Key Elements of Blockchain

Certain key elements of Blockchain pave the way for the smooth recording of financial transactions. They are highlighted below.

Distributed ledger technology

All types of participants in a blockchain network have access to the distributed ledger. They can also view the immutable record of all financial transactions. When this ledger is shared, all financial transactions are recorded once. This eliminates any need for duplication of common efforts in business networks and transactions.

Immutable records

Once a transaction is recorded on the ledger, no one can alter or tamper with it. A new transaction must be created if the previous transaction was incorrect. In this way, both transactions are visible to individuals on the blockchain network.

Smart contracts

A certain set of rules is called a smart contract for speeding up transactions. When it comes to corporate bond transfers, for example, a smart contract can include travel insurance terms and more. Now that you have an idea of the type of blockchain networks, let’s look at the types of blockchain networks.

Types of Blockchain Networks

There are numerous ways to create a blockchain network.They can either be private, permissioned, public or even built by consortiums.

  • Public blockchain networks

In this type of blockchain networks, anyone can participate and join, such as Bitcoin. However, the drawbacks can include a substantial amount of computational power, little to no privacy for transactions and even weak security.

  • Private blockchain networks

Similar to a public blockchain network, a private blockchain network exists. However, here only one organisation can govern the network, control who can participate, maintain the shared ledger and execute a consensus protocol.

  • Permissioned blockchain networks

Those businesses who want a private blockchain network will have their permissioned chain of networks. This places certain restrictions on the transactions within the network and the individuals or entities that can participate.

  • Consortium networks

There can be multiple organisations that maintain a blockchain. These organisations can determine who can submit transactions or access the shared type of data. These types of blockchain networks are ideal for businesses that need permission from all participants and have shared responsibility within the Blockchain.

The Benefits of Blockchain Technology

Blockchain is the new technology for the record-keeping of the future. Read on to find out some of the exciting benefits of this type of technology.

  • Greater trust

When you are a member of a blockchain network, you can be assured that you receive timely and accurate data. Thus, you can ensure that your blockchain records will be completely confidential and shared with members to whom access has been granted.

  • Greater security

To ensure data is accurate on a blockchain network, consensus is needed from all the members in the network. There is a guarantee that all transactions are authenticated and immutable because they are permanently recorded on the network Thus, no one, not even the system administrator, can delete transactions. For example, students seeking essay assignment help can pay using blockchain technology to ensure their payments are fast and secure.

  • More efficiencies

When a distributed ledger is shared among different network members, record transactions that waste time are eliminated. The Blockchain stores a set of rules known as a “smart contract” that can be automatically executed when a transaction order is placed.

Final thoughts

Blockchain has finally managed to make a name for itself because of the securities it can provide for businesses and cryptocurrencies. Since its involvement in mainstream financial operations and transactions, Blockchain can be used to make businesses and other government organisations secure, efficient, accurate, cheap, and ensures there are no middlemen.