5 characteristics that make Blockchain a promising technology
- Immutable: Data security concerns are addressed extremely well with Blockchain. With immutability a core characteristic, it becomes next to impossible to make any change or even alter the data after it is stored inside of a Blockchain.
- Hash Function: A hash is a one-way function that has multiple usages in decentralized systems and Blockchain. A hash function takes a specific input and runs an algorithm on it to produce a fixed length unique digital output called hash, hash value, digests or hash codes. The output length is fixed and smaller than the input. Every time the input is changed, the associated hash changes and makes the data unique. The mathematics behind the hash function ensures that there is no way to alter or change the original digital content. This ensures that the transaction is secure.
- Digital identity: While existing transaction system witnessed frauds and perils pertaining to the identity theft, Blockchain’s decentralization blended with unique digital ID for every transaction ensures that customers have more control over their personal information
- Peer to peer technology: Blockchain is considered to be one of the most effective peer to peer technologies. In a P2P network, interconnected peers or nodes are able to share resources with one another without using a separate server or centralized admin system. The DLT technology backed up by digital identities and digital currency eliminates the need for a central authority.
- Distributed ledger: A Blockchain is a Distributed ledger which is open to everyone. The unique characteristic of distributed ledger is its ability to make the data invulnerable to cybercrime or hacking. A distributed ledger is linked to a network of computers and in case someone wishes to tamper the data, he/she needs to change the data on every computer of that network. This makes it immutable.
We see three constant trends related to blockchain that will shape its development.
- Incumbents focus on protecting their intellectual property as they explore new collaborative opportunities with customers, suppliers, and competitors.
- Large financial institutions will need strategic plans to set parameters for technology risk taking.
- Market participants will start to develop the processes that surround the transactional layer.