How did the blockchain come about?
Blockchain emerged in 2008, within the Bitcoin project, and was developed by combining existing network technology (P2P) with advanced cryptography techniques. Satoshi Nakamoto, who has been credited with creating bitcoin, described it as a peer-to-peer electronic system.
According to IBM, there are some specific advantages of using this type of information chain, for example:
reinforced security
Your data is sensitive and crucial, and blockchain can significantly change the way you view your critical information. By creating a record that cannot be changed and is end-to-end encrypted, blockchain helps prevent fraud and unauthorized activity. Privacy issues can also be addressed on the blockchain by anonymizing personal data and using permissions to prevent access. The information is stored on a network of computers rather than on a single server, making it more difficult for hackers to see the information.
greater transparency
Without blockchain, each organization must maintain a separate database. Because this network uses a distributed ledger, transactions and data are logged identically across multiple locations. All network participants with authorized access see the same information at the same time, providing full transparency. All transactions are recorded immutably and are time and date stamped. This allows members to see the full history of a transaction and virtually eliminates any opportunity for fraud.
Instant traceability
Blockchain creates an audit trail that documents the provenance of an asset at every step of its journey. This is particularly useful in industries where consumers are concerned about environmental or human rights issues surrounding a product, or in an industry with counterfeit and fraud issues.
Greater efficiency and speed
Traditional paper-heavy processes are time-consuming, prone to human error, and often require third-party mediation. By optimizing these processes with blockchain, transactions can be completed faster and more efficiently. Documentation can be stored on the blockchain along with transaction details, eliminating the need for paper. Multiple records do not need to be reconciled, so clearing and settlement can be much faster.
Automation
Transactions can even be automated with “smart contracts”, which increase their efficiency and speed up the process even more. Once the pre-established conditions are met, the next step in the transaction or process will be automatically activated. Smart contracts reduce human intervention and reliance on third parties to verify that the terms of a contract have been met. In the insurance industry, for example, once a customer has provided all the documentation necessary to file a claim, the claim can be automatically settled and paid.
Disadvantages of using blockchain
Although the technology might seem like a panacea, it has certain drawbacks, for example:
There are some types of potential attacks that can be carried out against blockchain networks, an attack of this type can take place if an entity manages to gain control of more than 50% of the hashing power (or hash rate) of the network, which could eventually allow you to disrupt the network by deliberately excluding or modifying the order of transactions.
High implementation costs
Just as this technology represents low costs for users, it implies high implementation costs for companies, which delays its massive adoption and implementation, since physical information support is required.