Here is a brief video introduction on the topic of blockchain and its business benefits to the enterprise.

Transcript —

Hello and welcome to an introductory session on Blockchain Technology. In this brief session, I will introduce the blockchain technology, and provide an overview of its business benefits. In the other episodes on CIOTechCentral.com, you can find more sessions on Blockchain and other Digital and Internet Technologies.

Introduction

Blockchain is a software based technology that provides a secure and trusted distributed ledger over the Internet enabling a number of sophisticated applications related to transacting assets and value. Blockchain initially became popular with the launch of Bitcoin, which is one of the most widely used cryptocurrencies. Since then interest in blockchain technologies has skyrocketed as a potential means to power distributed applications in various industries. Although this technology is still in its infancy, it’s already being touted as one that will revolutionize and disrupt businesses at a scale much larger than any form of other historical technological disruptions.

What is Blockchain?

So, the next question is “What is a Blockchain?” Although the inner workings of blockchain is beyond the scope of this session, I will provide a brief overview on what a blockchain actually is. Basically, Blockchain is a distributed ledger that is made up of transaction blocks where each block contains a number of transactions that may have occurred anywhere on the distributed network. Each node on the network has a mirror copy of the ledger. So, that means that every time a transaction block is added to the ledger, all nodes on the blockchain network have to agree or arrive at a consensus to add that block to the ledger. Once all nodes agree, all nodes update their respective copies of the ledger.

The addition of blocks to the blockchain is done securely by using cryptographic and hash functions and some other security mechanisms that guarantee the integrity of the information in the block and also ensures that none of the previous transaction blocks of the blockchain are compromised. This mechanism in how blocks are securely added to the distributed blockchain ledger is what has made the blockchain technology attractive for various types of business use cases.

As I had mentioned earlier, the first implementation of blockchain technology was for the cryptocurrency Bitcoin. Since then, however, more advanced blockchain frameworks have surfaced to make up for the deficiencies that existed in the earlier implementation of blockchains. One of the primary features of the newer blockchain frameworks has to do with the inclusion of business logic in the blockchain. For example, the latest innovations such as those from the Ethereum foundation allow the development of business logic and to incorporate that part of the distributed blockchain. These distributed applications are referred to as smart contracts and execute in a secure fashion on each of the blockchain nodes. Similar to the ledger, smart contracts also have to be mirrored across nodes to ensure the integrity of the overall blockchain database and the business logic that drives it.

You can listen to other videos or read articles on CIOTechCentral.com covering various topics on Bitcoin and Blockchain.

Business Benefits of Blockchain

Next, let’s review some of the business benefits of the blockchain. As we had alluded to earlier, blockchain is suited for various use cases that involve asset ownership and transacting of those assets of value securely over a distributed network. Let’s review some of those benefits:

1. The distributed yet secure nature of blockchain is considered a great opportunity to do away with any applications or business processes that require the need for central authorities to establish trust between various parties. This is one of the main reasons for the emerging popularity of the blockchain systems. The idea is that with users engaging in a peer to peer fashion over a secure network don’t require central authorities to validate and authenticate transactions. Users in a bitcoin network, for example, can send payments to each other without the need of banks to validate those transactions. The underlying secure and distributed architecture therefore provides that foundation to all the parties.
2. As the need for intermediaries goes away with all parties having direct access to the blockchain ledger and the platform, it reduces the cost and time to reconcile and settle transactions. The reduction of cost comes with the reduction of processing costs across the larger ecosystem and the reduction of time comes from the elimination of intermediaries and the time they require to carry out their part in the overall business ecosystem.
3. Since blockchain allows building of a distributed ledger that resides on many nodes of the Internet, the downtime related to this platform is almost zero. Again, that’s because many nodes have an updated copy of the ledger and is accessible by its participants.
4. Transactions in a blockchain system become part of the ledger through a very secure and trusted mechanism of validating digital signatures based on the concepts of public key cryptography. This makes blockchain systems well suited for use cases that require establishing digital identities over the open and decentralized network, especially where multiple parties have the need to establish the identity of individuals.
5. Due to its potential to bring various parties on one centralized digital platform, it is ideally suited for large business ventures looking to create new markets or extend their enterprise’s ecosystems. For example, all organizations that are part of the car supply chain from the manufacturer to government agencies that register those vehicles and the customers that buy those vehicles can all be part of an extended blockchain providing all parties complete visibility on the complete history of the vehicles.

So, in a nutshell, the ability of a blockchain enabled platform to offer a decentralized yet secure and trusted foundation can enable various businesses and individual entities to securely collaborate with one another, carry out transactions, and exchange assets of value – all without the need for middlemen and intermediaries. Because of this we see that many organizations in multiple industries have started to test as well as deploy blockchain applications.

Look for other videos on CIOTechCEntral.com to learn the various business use cases where blockchain technology is being used.

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