Practical Applications of Block Chain Technology
Mr. S. M. Shinde, smshinde@coe.sveri.ac.in, Assistant Professor, Department of Computer Science & Engineering, SVERI’s COE, Pandharpur
In block chain technology, blocks are used to store the data about monetary transactions. As well, block chain is actually a pretty reliable way of storing data about other types of transactions. In fact, block chain technology can be used to store data about property exchanges, stops in a supply chain, and even votes for a candidate.
The following are the some of the most popular applications of block chain being explored today.
Bank Use
Usually, the financial institutions does not operate for all the days of the week, even the transactions can take one to three days to verify due to the sheer volume of transactions that banks need to settle. Here, block chain works continuously.
Use in Crypto currency
Currencies like the U.S. dollar are regulated and verified by a central authority, usually a bank or government. If a user’s bank collapses or they live in a country with an unstable government, the value of their currency may be at risk. So, the Bit coin is the best solution for this problem.
Healthcare Uses
Health care providers can leverage block chain to securely store their patients’ medical records. When a medical record is generated and signed, it can be written into the block chain, which provides patients with the proof and confidence that the record cannot be changed.
Property Records Use
Today, a physical deed must be delivered to a government employee at the local recording office, where is it manually entered into the county’s central database and public index. In the case of a property dispute, claims to the property must be reconciled with the public index.
Use in Smart Contracts
A smart contract is a computer code that can be built into the block chain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out.
Supply Chain Use
Suppliers can use block chain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of their products, along with health and ethics labels like “Organic,” “Local,” and “Fair Trade.”
Uses in Voting
Voting with block chain carries the potential to eliminate election fraud and boost voter turnout. Each vote would be stored as a block on the block chain, making them nearly impossible to tamper with. The block chain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and provide officials with instant results.
Advantages and Disadvantages of Block chain
For all its complexity, block chain’s potential as a decentralized form of record-keeping is almost without limit. From greater user privacy and heightened security to lower processing fees and fewer errors, block chain technology may very well see applications beyond those outlined above.
Pros
- Improved accuracy by removing human involvement in verification
- Cost reductions by eliminating third-party verification
- Decentralization makes it harder to tamper with
- Transactions are secure, private and efficient
- Transparent technology
Cons
- Significant technology cost associated with mining bit coin
- Low transactions per second
- History of use in illicit activities
- Susceptibility to being hacked
Here are the selling points of block chain for businesses on the market today in more detail.
Accuracy of the Chain
Transactions on the block chain network are approved by a network of thousands or millions of computers. This removes almost all human involvement in the verification process, resulting in less human error and a more accurate record of information. Even if a computer on the network were to make a computational mistake, the error would only be made to one copy of the block chain. In order for that error to spread to the rest of the block chain, it would need to be made by at least 51% of the network’s computers—a near impossibility.
Cost Reductions
Typically, consumers pay a bank to verify a transaction, a notary to sign a document, or a minister to perform a marriage. Block chain eliminates the need for third-party verification and, with it, their associated costs. Business owners incur a small fee whenever they accept payments using credit cards, for example, because banks have to process those transactions. Bit coin, on the other hand, does not have a central authority and has virtually no transaction fees.
Decentralization
Block chain does not store any of its information in a central location. Instead, the block chain is copied and spread across a network of computers. Whenever a new block is added to the block chain, every computer on the network updates its block chain to reflect the change. By spreading that information across a network, rather than storing it in one central database, block chain becomes more difficult to tamper with. If a copy of the block chain fell into the hands of a hacker, only a single copy of the information, rather than the entire network, would be compromised.
Efficient Transactions
Transactions placed through a central authority can take up to a few days to settle. If you attempt to deposit a check on Friday evening, for example, you may not actually see funds in your account until Monday morning. Whereas financial institutions operate during business hours, five days a week, block chain is working 24 hours a day, seven days a week. Transactions can be completed in about ten minutes and can be considered secure after just a few hours. This is particularly useful for cross-border trades, which usually take much longer because of time-zone issues and the fact that all parties must confirm payment processing.
Private Transactions
Many block chain networks operate as public databases, meaning that anyone with an internet connection can view a list of the network’s transaction history. Although users can access details about transactions, they cannot access identifying information about the users making those transactions. It is a common misperception that block chain networks like bit coin are anonymous, when in fact they are only confidential.
That is, when a user makes public transactions, their unique code called a public key, is recorded on the block chain, rather than their personal information. Although a person’s identity is still linked to their block chain address, this prevents hackers from obtaining a user’s personal information, as can occur when a bank is hacked.
Secure Transactions
Once a transaction is recorded, its authenticity must be verified by the block chain network. Thousands or even millions of computers on the block chain rush to confirm that the details of the purchase are correct. After a computer has validated the transaction, it is added to the block chain in the form of a block. Each block on the block chain contains its own unique hash, along with the unique hash of the block before it. When the information on a block is edited in any way, that block’s hash code changes—however, the hash code on the block after it would not. This discrepancy makes it extremely difficult for information on the block chain to be changed without notice.
Transparency
Even though personal information on the block chain is kept private, the technology itself is almost always open source. That means that users on the block chain network can modify the code as they see fit, so long as they have a majority of the network’s computational power backing them. Keeping data on the block chain open source also makes tampering with data that much more difficult. With millions of computers on the block chain network at any given time, for example, it is unlikely that anyone could make a change without being noticed.
Disadvantages of Block chain
While there are significant upsides to the block chain, there are also significant challenges to its adoption. The roadblocks to the application of block chain technology today are not just technical. The real challenges are political and regulatory, for the most part, to say nothing of the thousands of hours (read: money) of custom software design and back-end programming required to integrate block chain to current business networks. Here are some of the challenges standing in the way of widespread block chain adoption.
Technology Cost
Although block chain can save users money on transaction fees, the technology is far from free. The “proof of work” system that bit coin uses to validate transactions, for example, consumes vast amounts of computational power.
Speed Inefficiency
Bit coin is a perfect case study for the possible inefficiencies of block chain. Bit coin’s “proof of work” system takes about ten minutes to add a new block to the block chain. At that rate, it’s estimated that the block chain network can only manage seven transactions per second (TPS).
Illegal Activity
While confidentiality on the block chain network protects users from hacks and preserves privacy, it also allows for illegal trading and activity on the block chain network. The website allowed users to browse the website without being tracked and make illegal purchases in bit coins.
Central Bank Concerns
Several central banks, including the Federal Reserve, the Bank of Canada and the Bank of England, have launched investigations into digital currencies.
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