You may link distributed ledger technology like blockchain with the notorious Bitcoin and cryptocurrencies. Yet there is more than that about it. Particularly when it comes to making business use of it.
But how does it function? And more importantly, how do blockchain solutions help your business thrive in the digital transformation age?
Distributed ledger (DLT) technology is an overarching terminology used to explain systems that digitally store data transactions among multiple participants.
They are decentralized databases that are trusted and can not be tampered with. They're practically hack-proof ledgers.
Blockchain grew to prominence as the first full-fledged DLT due to its usage as the underlying technology for the cryptocurrency ecosystem.
However, the advantages of implementing blockchain enterprise solutions in the last decade, including handling data and business operations more accurately and conveniently, are reaching the main stage.
But, first, let's discuss two types of blockchains: public and private.
Anyone can access the network in a public system; they can also read and write transactions. Such systems are autonomous, which means that there is no individual with complete authority. Once the system's data gets checked, no entity can modify it. For cryptocurrencies, public blockchains are popular.
Contrarily, private networks impose limits on who's eligible to join, unlike public blockchains. Users with certificates issued by a certification authority are approved. Different rights are then allowed to users, whether it is read-only or whether they can input transactions on the data chain.
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Private blockchain networks have immense advantages for companies, whether it is speeding bookkeeping or accounting, reducing indirect costs of production processes and large-scale software, or maintaining authentic transfers of data.
Total investment in blockchains will hit $US 12.4b by 2022, according to the IDC Worldwide Blockchain 2018-22 prediction.
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When entries get submitted to the distributed ledger and become evidence of a permanent archive, any effort to alter the information gets prevented.
It is because the alteration can get revealed by the series of cryptographic signatures. It provides a strong defense against mistakes or theft, or systemic attacks against information.
The right to audit the data stored on the blockchain (as well as verify the digital signatures) is open to any entity or device that can access its distributed ledger.
On the distributed ledger, all participants have access to the same information.
Notice that this does not imply that all data must be public or accessible to each user by default. In this case, permissioned distributed ledgers come into use to manage permissioned access to storage data.
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The function of the distributed ledger does not rely on anyone's organization's systems, ownership, or market continuity.
It suggests that such an entity cannot have a detrimental effect on the functioning of the distributed ledger.
The distributed ledger possesses the capability to 'horizontally scale' to satisfy demand growth across applications and encourage greater resilience.
For stored data protection, distributed ledgers profit from powerful cryptographic techniques.
Shared and distributed information available across the system gives increased protection against point threats, including denial of service or efforts to change the ledger's content.
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Using the Hyperledger Fabric project sponsored by the Linux Foundation, businesses can build proofs of concepts for use cases such as document processing, verification, KYC (Know Your Customer), reliability of the supply chain, and banking/finance.
Fabric can also support smart contracts and approved distributed ledgers.
Ethereum is the second best-known and most valuable cryptocurrency. It offers a framework for decentralized application implementation as well as a way of exchanging value as cryptocurrency.
Smart contracts are supportable by Ethereum and are comparatively small code functions explicitly performed by the nodes supporting the Ethereum network.
For example, smart contracts may come into use to activate payments for goods that are subject to external requirements.
Furthermore, other tokens are developable on the foundation of Ethereum technology.
Ripple describes itself as the fintech industry's blockchain designed to overcome the challenges that delay involved in cross-border payments and settlements.
It, like Ethereum, has two facets, one as a blockchain of its right that helps users to pass funds (fiat and crypto) directly to other users worldwide.
The second element is RippleNet, which banks, exchanges, and corporates use for the business transition to business funds.
Ripple has configurations that can accommodate considerably higher transactions per second, faster transaction processing times, and much lower fees than Bitcoin and other cryptos.
It is theoretically also beneficial for IoT transactions with smaller value and microtransactions, including data billing.
IOTA defines itself as a next-generation blockchain based on its utilization of the IoT (Internet of Things) as a ledger of things.
It utilizes a revamped distributed ledger architecture recognized as Tangle 32.
It is massively scalable, as well as capable of preventing the expense of replicating all data to all nodes.
The IOTA Foundation has partnered with organizations like Orange, DT, Volkswagen, Fujitsu, Microsoft, and Bosch.
IOTA solutions can power micro-transfers, data transfer, polling, and transmitted messaging.
For IOTA tokens, no mining is necessary, and there is no charge for entry to the IOTA DLT.
If you can justify using a DLT for your business, and the use case is right for it, then it is wise to proceed ahead. You will be able to securely store business transfers, conceal them from unauthorized users, and use cryptography to make them hacker-proof.
At Oodles, we have experiential knowledge and experience in working across several blockchain technologies and delivering projects that directly or indirectly impact the bottom line of a business.