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Blockchain 101: its inner workings, challenges, and future prospects

Don't worry, we speak : Español (Spanish), too!

This week we had our Morning Coffee with Sourodip Biswas from Space-O Technologies.

Contxto – Blockchain is slowly emerging out of the shell and manifesting itself into something bigger than cryptocurrency. For the uninitiated, the technology found itself in the limelight as the underlying technology for Bitcoin.

For a lot of people, the two were synonymous. However, with businesses trying to incorporate blockchain, and enabling it as a powerful solution to overcome a few of the challenges in the manufacturing, investment, insurance, and even the finance sectors, blockchain is shedding its image.

However, the biggest challenge is still eyeing business, and it is yet to overcome it. Data privacy in the digital era is becoming complicated. With various data entry points, the data is slowly becoming difficult to protect, and as a result, customers are becoming wary of sharing the same.

Enterprises are trying to identify ways in which blockchain can help them with data privacy. Let’s take a quick look at how it can help with security.

Blockchain for security: how does it help?

Encryption of data

Data encryption is the first aspect of security to be is fully assured by blockchain technology. For instance, you want to ensure that a particular file is stored in a way that no one can modify it. You can encrypt it with a digital signature stored on blockchain.

If anyone tampers the file or the signature, you will know of it immediately. Blockchain offers additional security, which ensures that no part of the file is interfered with, and you don’t even need to save the file on blockchain.

One of the primary reasons for this could be attributed to the decentralized nature of the technology. In case someone does tamper, then the new signature or data is considered invalid, and the whole document gets protected.

Decentralization for security

Blockchain is completely decentralized, which means you won’t need to rely on a single point to encrypt the data and protect it. So, basically in this digital ledger, you will see that all the computers connected via the technology will have the data.

There will be no middlemen completing the transaction in this case. Instead, the technology uses consensus protocols across the nodes and validates every data stored and every transaction that occurs.

The accuracy of the data is particularly important, and you will see that blockchain offers complete trust when it comes to data storage and retrieval. Apart from trust regarding the security of data, you also need to make sure that data is available irrespective of the failure of a computer.

As data gets stored on more than one computer, it is easier to retrieve and use the data.

Reduced vulnerabilities

When it comes to data being hacked, the principle reason could be attributed to the fact that the data is vulnerable. With blockchain as the technology that determines the health of data, you can stay assured about data not being hacked.

When it comes to this technology, you will realize that there are fewer chances of the data being changed from a single location, as they are not contained in a single place. The whole technology works on the decentralization technique.

The peer-to-peer network keeps the entire data in sync. As all the data are saved onto the different nodes, it becomes difficult for the hacker to actually break into the computer and get the data.

Due to these above-mentioned reasons, you will realize the blockchain is indeed the reason why data security is efficient and possible in recent times.

A few case studies

Let’s look at some of the use cases for blockchain technology in security management:

  • Let’s say a music composer has released a solo album. The credit for the album belongs to her. However, traditionally, digital music could be copied and released in their own name. Hacking was possible, and there were no real means of copyright technology. Blockchain offers certification as a tool that provides copyright for the composition.

    You simply need to add the certification once the album is recorded and add encryption to it. Once done, and saved on Blockchain, there is no chance anyone can manipulate the data or even copy the music. It is permanently in your name.
  • Certifying any jewelry is important, especially if you want to sell it or use it in the future. Earlier, the whole process was offline, and there were a lot of vulnerabilities to the process online. However, blockchain has redefined everything with the certification as a tool.
  • The smart contracts help businesses achieve the permanency in their contracts that were not there earlier under traditional circumstances.

These are a few use cases that state the importance as well as the need for this technology.

If you are planning on implementing the blockchain technology to your enterprise, there are a few things you need to consider. Compliance is important, especially if security is of utmost importance to you.

Factors to consider for blockchain

There are a few factors that you need to consider before you begin considering Blockchain for the enterprise:

  • In the case that multiple parties are planning to share data, then you need to ensure that there is a common denominator, in terms of information, between these parties for the perfect sharing of data.
  • In case you are planning that the multiple parties should be able to update data, then there should be a way for these parties to record the data, and keep updating it on a regular basis.
  • There is a need for verification of the data, and you need to ensure it happens. Before data verification, you need to make sure that there is conviction and trust among the people who are sharing the data. You need to educate them on the data validation methods.
  • There are no intermediaries in this case, which means there are fewer complexities in blockchain methods. However, if you were to add intermediaries, there are chances that the overall cost, as well as complexity, would increase. Try to find ways in which you can avoid having an intermediary.
  • With blockchain, every interaction is time-sensitive, which means any delay would cost you dearly and would reduce the overall benefits.

Summing up

Data privacy and security is important for enterprises, as they have a lot at stake. It is important for organizations to take a deep dive into blockchain technology and embrace it.

The technology is not just the future of enterprises but also offers major benefits to them. With this technology, the enterprises can take the leap and reap in better security for their data.

This technology enables enterprises to ensure better customer satisfaction and more trust among the parties sharing data.

Sourodip Biswas is a Digital Marketing Professional at Space-O Technologies—a Mobile App Development Company.

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Today’s Soapbox opinion was written by Eduardo Morrison, a corporate lawyer with banking experience, specialized in crypto and blockchain.