Blockchain technology, sometimes called DLT (Distributed Ledger Technology), is one of the technologies that will revolutionize our world. Blockchain emerged as a technology option a few years ago but is poised to change the world of computing the same way open-source software did a quarter of a century ago.
Blockchain tends to become a more efficient and less expensive way to share information and data between open and private networks.
In short, the Blockchain technology allows data to be stored globally on thousands of servers while allowing anyone on the network to see the inputs in near real-time. Keep reading this article to know the benefits of blockchain technology.
What is Blockchain- a technology with multiple advantages?
A peer-to-peer data storage and transmission system, Blockchain is an innovative technology with strong development potential. A blockchain is a tool with significant potential for setting up more secures, more intuitive, and more collaborative systems.
Known to the general public since the creation of Bitcoin in 2008, the Blockchain offers many advantages, promises of improvement in current data exchange practices and systems. Many followers go so far as to speak of revolution, and the list of potential applications does not make you want to contradict them.
Let’s see the top 5 benefits of blockchain technology
Here is a comprehensive summary of the information you need to know all benefits of blockchain technology.
A fundamental aspect of blockchain technology, decentralization, comes from the absence of a trusted intermediary during transactions and the fact that each node of the network has a copy of all the data in the chain. Bitcoin was indeed created in reaction to the lack of confidence in financial institutions after the global financial crisis of 2008.
The monetary system centralized around States, central banks, and private banks had then revealed its major flaws: its instability and its great fragility in the event of a crisis due to the interconnection of its players.
Peer-to-peer transactions and data decentralization, therefore, protect users from several evils, such as:
- Weakening of the system,
- Monopoly and hegemony situations,
- Conflicts of interest,
- Price manipulation.
In addition, decentralization makes it possible to limit significantly transaction costs (control or validation costs, financial costs, recourse to paid third parties, etc.).
2. System security and stability
The security of a blockchain is ensured by its users themselves, in particular through the mining process. This consists of controlling and validating the transactions carried out within the network, thus creating new blocks.
Mining requires complex mathematical calculations, notably involving hash functions, which require a great deal of computing power. Therefore, blockchains are deemed perfectly inviolable; Bitcoin has never been hacked since its creation. To achieve this, hackers would indeed have to control 51% of the network, which in practice is almost impossible.
Moreover, given that each node of the network can store all the Blockchain data, it is particularly stable. Therefore, the failure of one or more users cannot crash the entire chain.
3. The speed of transactions
Blockchain technology makes it possible to carry out monetary transactions between two parties much faster than in the traditional framework of fiat currencies. Indeed, due to the absence of passage by a third party, the validation and the execution of a transaction do not take more than a few minutes on the Bitcoin blockchain.
In a classic fiat currency transaction, the transaction may take several days to complete. Very low transaction times are, therefore, one of the major benefits of blockchain technology.
4. The peer-to-peer dimension
The application of blockchain technology made it possible, for the first time, to carry out value exchanges without the need to resort to a third party. This advantage is undoubtedly the most revolutionary and the most promising in terms of possible technology variations.
In particular, on the Ethereum blockchain, smart contracts now make it possible to program transactions of values between two parties without any external intervention. Some airline insurance companies have already taken benefits of blockchain technology; they use it to automatically compensate their customers, for example, in the event of a flight cancellation.
5. Data reliability
Finally, one of the main benefits of blockchain technology is its tamper-proof aspect. As soon as a piece of data is entered in a block after its validation by minors, it is in practice impossible to modify or delete it. The information contained in a blockchain is thus highly reliable, in addition to being perfectly traceable.
This immutable registry function may again find many applications in the future, as reliable and tamper-proof data is required, for example, to seal deeds of the property or to keep financial records.
Winding it up;
Therefore, blockchain technology has many benefits, which largely explain its popularity for more than ten years now. However, decentralized, stable, secure systems, allowing rapid peer-to-peer exchanges, blockchains are not necessarily flawless; their energy consumption is a major example. The future will tell us in which sectors of activity this technology will find new applications.