In recent years, the word ‘blockchain’ has been constantly a term of discussion of multifold individuals, mainly visionaries and programmers who know of its potential. It piques the interest of some because of the massive rise of opinions and the use of cryptocurrencies, specifically Bitcoin.
Unfortunately, a lot of people still don’t know of its hidden potentials, how it works, why so many people are into these types of transactions and common financial mistakes that one should keep in mind.
Blockchain is a distributed and decentralized public ledger. In a simple context, it means a block of chains. The block here means digital information stored in a public database which is the chain. It should also be noted that the information here cannot be altered.
Check out how blockchain works here.
Blockchain and Its Uses
One of the most popular uses of Blockchain is the development of Bitcoin and other cryptocurrencies. For instance, blockchain enables cryptocurrencies to exist without the need for a central authority.
It could be used as a dependable way of storing data or other types of transactions including property exchanges, bank transactions, healthcare services, smart contracts, supply chain uses and even voting during elections.
The health care services field were able to store files efficiently without sacrificing its security and privacy.
The chances of human error in property records were minimized, making it accurate and permanent.
The tracing of the origin of purchases is made possible, thus ensuring the authenticity of the products.
Third-party mediators are eliminated with the use of smart contracts.
Lastly, the possibility of fraud during the election is eliminated with the use of blockchain operated machines.
It could be inferred that the use of blockchain has indeed improved the way of record-keeping transactions. It also improved its accuracy by removing human involvement in verification. Furthermore, its decentralization qualities make it harder to tamper. These are various reasons why it is termed by many as the most disruptive technology since the internet.
Unlocking Blockchain’s Profit Potential and Financial Mistakes to Look After
Despite the ample reasons why blockchain is beneficial to everyone, we should not forget that like everything else, it has flaws and shortcomings that we should not overlook. Knowing the down-side is essential to avoid common mistakes an individual makes when it comes to blockchain.
Not properly using blockchain’s main feature
It should be noted that blockchain’s main selling point is its decentralized ledger that is capable of producing immutable data but regrettably. This main point itself is not properly utilized by a lot of individuals. This feature itself could produce strong unalterable data audit trails.
The assumption that blockchain technology is old enough
Blockchain did not exist a few years back. Although it has indeed developed in the previous years, many enterprises mistakenly assume that it is sufficient enough to be produced in the market. Unfortunately, it is still not ready to be mass-produced because it is still lacking in some ways and only Bitcoin and Ethereum are proven to be quite good enough.
Blockchain can do it all
One of the common mistakes is the idea that blockchain can do it all alone. As promising as everything is with blockchain, unfortunately, it cannot solve all the problems in business transactions. There’s a belief, that maybe shortly or many years from now, blockchain will be the foundation layer under everything.
Misconception about scale
Blockchain should not purely be considered as a database or data storage system. Even though blockchain indeed provides unchangeable records of the transaction, it does not have the whole attributes of a conventional database management technology. Thus, it is not practical to use it as a data storage system.
Interoperability among blockchains
The interoperability standard of blockchain does not exist now. Blockchain’s current technology still lacks maturity and it still needs improvements. Furthermore, one should be skeptical about the idea of interoperability among blockchains.
Assuming smart contracts are operating perfectly
Smart contracts are one of the most promising aspects of blockchain. It is a computer code that can be built into the blockchain to facilitate, verify or negotiate a contract agreement. It is beneficial to businesses but it still has some issues like scalability and manageability that needs to be addressed.
Ignoring funding and governance issues
In comparison with other current options in the market today, blockchain is indeed less costly but the amount is still significant. There are a lot of questions about blockchain concerning governance, societal and political aspects that could create further costs to the current business model. Planning for future uncertainties is essential.
Blockchain is indeed a revolutionary force to reckon with in the financial industry. Although it is a technology that has been developed in recent years, it can be noted that it holds numerous potentials that could help the business world.
There are some things that we need to consider to avoid committing mistakes involving this new technology. But still, one thing is clear, the future of the financial industry is promising!