Blockchain technology is the shared and unchangeable ledger that ensures that transactions are recorded, and assets are tracked in the business network. Assets are either tangible or intangible, and since blockchain is virtual, it facilitates tracking and trading, thereby reducing the associated risks and cutting down costs (Ruoti et al. 47). Blockchain has become ideal for businesses since it delivers immediate, transparent, and shared data, which is stored in an unchangeable ledger that is only accessed by authorized individuals.
The history of blockchain technology began in 1991 when Stuart Haber and W. Scott Stornetta worked on a chain of blocks that were cryptographically secured. No individual could interfere with the documents’ timestamps (Iredale para1). The system was upgraded in 1992 to include Merkle trees, a feature that improved efficiency and allowed the collection of more details in one block. However, blockchain technology began gaining relevance in 2008 after Satoshi Nakamoto published the Bitcoin whitepaper (Iredale para3: Sakız and Gencer 154). The technology has since evolved and found applications in other sectors beyond cryptocurrencies. Blockchain’s primary function was to act as the basic technology for Bitcoin to ensure secure and transparent transactions without requiring external intermediaries such as banks. Blockchain functions have transcended cryptocurrencies to involve applications and industries like smart contracts, supply chain management, and identity verification (IBM para 1). The transactions in blockchain are recorded and verified by the technology implying that value and data transfers can be traced transparently without tampering by other entities (Iredale para4). Blockchain technology functions as a distributed and immutable ledger that participants in the network can access. When a transaction takes place, it is documented as a ‘block’ of data, which indicates the movement of the assets and includes information about the assets (IBM para 4). Different blocks are connected to the others before and after them to create a data chain as the assets move. The blocks indicate the actual sequence and time the transactions took place while linking securely to prevent alteration or insertion of other blocks. The transactions are then blocked in an irreversible chain, creating an immutable and tamper-evident blockchain.
Blockchain is a decentralized system, and it was created to deal with the problems associated with centralized systems. It was developed as a way of storing and securing digital data. It is an open ledger accessible by multiple parties without tampering with the transactions (IBM para 1). There was a need to create a system that could be trusted since the traditional centralized systems depended on consolidated authorities for the validation of records and maintenance. This led to concerns regarding manipulation of data and compromised transparency. Additionally, traditional databases are prone to cyberattacks and data breaches. Therefore, there was a need for a system that would endure such risks and ensure that sensitive information remains secure. Furthermore, blockchain technology was created to exempt the need for intermediaries such as banks (Ruoti et al., 50). Such intermediaries add costs to financial transactions and slow down the processes. Before blockchain technology was developed, industries used centralized databases and ledgers to keep their records and to process transactions. However, the systems were vulnerable to risks such as data breaches and lacked transparency. Blockchain technology provides the transparency and security features that the prior systems lacked.
Blockchain technology is associated with greater trust, security, and efficiency. The direct beneficiaries of blockchain technology include organizations and individuals involved in supply chain management, financial transactions, and identity verification. For example, cryptocurrency users benefit from low-cost, fast, and boundless peer-to-peer transactions. Additionally, those in supply chain management enjoy the transparency and traceability of their assets, reducing fraud and ensuring their authenticity (IBM para 5). The indirect beneficiaries of blockchain technology include governments, corporations, and global trades. Blockchain technology streamlines operations, reduces fraud cases in corporations, and improves trust and transparency in government services such as identity management and voting (Sakız and Gencer 156). In global trade, blockchain facilitates foreign trade by ensuring that the documents and transactions are accurate and transparent. Blockchain technology influences human behavior and culture by empowering individuals to control their financial assets, identities, and data. This impact fosters a sense of autonomy among individuals. The outcome is that there has been an emergence of blockchain enthusiasts and communities who create awareness of digital asset ownership.
Blockchain technology is expected to remain at the forefront as more developers continue creating blockchain applications. The developers are expected to look for services that integrate blockchain apps with data or non-blockchain services operating on incompatible blockchains. In the future, blockchain technology can enhance financial inclusion for unbanked and underbanked individuals worldwide by allowing them access to financial services, thus, fostering economic growth. The financial services incorporated with blockchain technology may include borrowing, lending, and trading. Additionally, as technology continues to mature, it may revolutionize different processes and industries. In the Internet of Things (IoT), blockchain technology can be incorporated to enhance security and decentralize the infrastructure for IoT devices leading to autonomous communication and transactions. Moreover, blockchain technology could also be integrated into healthcare to improve patient records, secure medical data, and facilitate collaboration among healthcare providers. Furthermore, with the evolution of blockchain technology, real-world assets such as artworks and real estate could be represented in blockchain as digital tokens, increasing liquidity and accessibility.
Although blockchain technology has been showing great potential in the future, its success will depend on how scalability, regulatory challenges, and public reception issues will be addressed. Further transformations of the technology are expected, ad it continues to evolve. Since technology is rapidly advancing, its future remains a continuous research and development subject.
Works Cited
IBM. “What is blockchain technology?” n.d https://www.ibm.com/topics/blockchain
Iredale, Gwyneth. “History of blockchain technology: A detailed guide.” 2020. https://101blockchains.com/history-of-blockchain-timeline/
Ruoti, Scott, et al. “Blockchain technology: what is it good for?” Communications of the ACM 63.1 (2019): 46-53.
Sakız, Burcu, and Ayşen Hiç Gencer. “Blockchain beyond cryptocurrency: non-fungible tokens.” International Conference on Eurasian Economies. 2021.
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