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Practical Blockchain Usage

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Blockchain vs. Bitcoin

Since blockchain technology used by bitcoin was introduced, there has been a lot of talk about how this new technology is going to change the way transactions will be conducted, and how information will be shared. However, there is not a lot of information about companies that are actually using it successfully, other than Bitcoin. Why is that?

Blockchain technology can be applied to many things such as social media, sharing of healthcare information, and banking transactions – just to name a few. Information can be stored and shared instantly without having a central entity in control. With blockchain technology, everyone connected stores their own complete copy of the chain of information and transactions, so if one entity should fail there are several more copies available. Most companies and businesses simply do not need a distributed ledger and are far better served using legacy database solutions.

Since Bitcoin was the first application of blockchain, many confuse the two as being the same thing. Wile those that discard Bitcoin, often acknowledge the significance of Blockchain technology and attempt to decouple the two. What many enamored with Blockchain technology do not understand is that it is not worth the cost if decentralization is not needed, or wanted. Decentralization is the cornerstone of Blockchain technology because it makes the system stronger, immune to censorship, and unable to be controlled by any single owner. Bitcoin transactions are stored and transferred on the Blockchain in a peer-to-peer network that is 100% open, public, and anonymous. So when this is understood, it is easy to see why many touting Blockchain as the “next big thing” clearly are confused about its purpose.

Decentralization Fundamentals

If there is no decentralization, transactions can be made without the funds to back it up, while transactions or actions can be canceled or blocked without justification – such as “chargeback” issues currently faced by most merchants. Furthermore, blockchain is not a technology businesses can implement or run on a budget. It requires the development of custom solutions, custom coded software, and blockchain expert developers – none of which are cheap. Then there is the energy consumption issue that requires a company to possess enough servers properly configured for current tasks.

The reality is that blockchain is costly and does not solve everything, so using it for the sake of using it is a bad idea. Companies already using streamlined technology suited to excel revenues and increase business do not need blockchain. If the cost of implementing, running, and maintaining blockchain overshadow potential revenue, it is not needed. If a decentralized model does not fit your business, it is not only not needed, it is a bad idea. If there is no issue for blockchain to solve in your business, again – not needed.

When implemented correctly and for the right purpose, it can indeed revolutionize and transform a business. If not, it can destroy a successful, existing business and result in huge losses. The hype around blockchain due to the success of use for Bitcoin should not be the reason a business seeks to implement this technology. The idea of blockchain is to replace centralized ledgers with distributed ones in order for any fact to be proven. For example, if you want to know who owns a particular property, everyone on the blockchain could be polled because everyone would have a copy of the ledger.

Logical Use Examples

The advantages are clear. The time and effort required to create and maintain a secure ledger are eliminated, as is the need to have constant communication with the centralized ledger in order to get answers to questions. Most importantly, the possibility of cheating is eliminated because no one entity maintains the ledger.

This brings us to a list of businesses that might actually benefit by using Blockchain technology:

  • Banking
  • Messaging Apps
  • Voting
  • Smart Contracts
  • Ride Sharing
  • Healthcare
  • Internet Identity & DNS
  • Critical Infrastructure Security
  • Internet Advertising
  • Education
  • Car Leasing and Sales
  • Cloud Storage & Computing
  • Predictions Market
  • Music & Entertainment IP Rights
  • Stock Trading
  • Real Estate
  • Supply Chain Management
  • Energy Management
  • Sports Management
  • Loyalty Programs
  • Public Government Records
  • Wills and Inheritances
  • Charity Donations
  • Credit Histories
  • Crowdfunding
  • Commodity-Backed Currency
  • Libraries
  • Publishing
  • Gambling
  • Accounting
  • Waste Management
  • Hospitality Booking
  • Art Provenance
  • e-Commerce
  • Insurance

 

 

 

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