What is the relation between Bitcoin and Blockchain?
Bitcoin was built to simplify transactions without involving a trusted third party, by bypassing government control of currency. And as we already know by now, it does so by maintaining thousands of ledgers all over the world and making all transactions transparent and public. If A transfer tokens to B and there is no trust relationship between them, then B doesn’t have to worry if he will have the money or not. Similarly, A also doesn’t have to worry if B will deny getting the token even if he got it. Both of them can see it publicly by using their addresses on the Blockchain, whether the transaction was made or not. Similarly, Ethereum is another product built using Blockchain technology. You can go to their website and view all the transactions.
Another groundbreaking product built over Blockchain is Ripple. Ripple’s distributed financial technology enables banks to send real-time international payments across networks. Ripple is a private network, and not everybody can join it. It only provides its services to banks and other financial institutions. It boasts about having more than 80 financial institutions on board with it all over the world as of today. And this includes some widely popular banks.
Now you will wonder why all these banks want to be a part of ripple? International payments for businesses and cross border remittances have always been tricky, and with the government regulations involved on both ends, there are lots of time and money involved. Suppose that you want to send money from India to the USA,. On average, this takes about 6-7 days and quite a fee. The minimum time required to transfer money is 4 hours, and this also comes with bad exchange rates and higher costs. Now, if your bank is using ripple, and the receiver’s bank is also on board with ripple, then this entire process would take not more than 1-2 minutes (depending on the network congestion). Since ripple is private, we can count on the lesser fee and time taken.
A P2P Network
In a centralized network, there is only one focal point. At the same time, in a decentralized network, there are different nodes or different databases connected to the focal point. In case if the focal point goes down in a centralized system due to any failure, then you need to ensure the availability of this data elsewhere. The 3rd one is a distributed network which is not a peer to peer network, and it is distributed at different ranges, where everybody connects directly to each other. The decentralized network is used in Blockchain. People are connected to each other through one primary node, and then you have different nodes connected to it. By nodes, I am referring to the different computers which are connected to various nodes forming a decentralized network.
The bitcoin is also based on this network, where I will take one point as bitcoin network, connecting to which I will have the synchronized data of that bitcoin network. Now, for example, other people like my friends or family want to connect to this network they don’t need to connect to the Bitcoin node, they can directly connect to me and get all the access to the data. So, in this kind of interconnectivity, there is no central point of failure.
Now let’s explore the server-based network and P2P network. In a server-based network, there is a central server, and all the clients are connected to it. But ina peer to peer network, we remove the server and instead each computer connects to the other by itself, becoming a server and client at the same time. So, it’s basically taking data from one peer and providing data to another peer. Everything on the bitcoin & ethereum network or, for that matter, any Blockchain is saved similarly. For example, if there is a transaction happening in America, it will be visible on the network in Korea, India, and many other countries, which are the nodes hosting this network.
Blockchain Use Case
Introduction
So now let’s understand the supply chain industry use cases for Blockchain. Records management, supply chain management, invoice and receipt verification, vendor payments, data security in different industries like banking and healthcare are some of the best use cases of the supply chain.
Records Management
Often we face the problem of maintaining critical business records due to the risks associated with data corruption. The best solution for this is setting up a Blockchain-based records management system. In this setting, whenever any Business record is generated, a unique signature is published into the Blockchain. The records are stored in standard media formats like PDF, JPEG, or PNG. The sequence information of these records is stored in the Blockchain and the application. Web applications can easily use the API to verify if the records have been tampered with or not, and also generate an audit trail for the entire module, entire branch, a specific product or anything you want.
One of the most significant benefits of setting up Blockchain-based records management is that no central authority is required for data verification. Human nature is vulnerable, but the technology is not. You can customize the Blockchain in such a way that anyone can read the records, but only a specitic application or person can write the record into the Blockchain, thus making it completely safe and secure.
Healthcare Record Management
Hospitals have a lot ot inventory, including material purchase and asset tracking, which can be executed efficiently with the help of Supply Chain Management. So, in this case, the material purchase will be defined as initialization of the assets into the Blockchain while issuing materials to the particular hospital, branch, or doctor, and it will be transferred to that person’s name or the branch name. After that, once the material has been consumed, it can be deleted and burned from the Blockchain, or it can be transferred to a consumed account. Here all the invoices and receipts are digitally stored and tracked in Blockchain. So, recording data in a same ledger removes the need for reconciliation, reducing the confusion of maintaining the identical copy for everyone.
This benefits the hospital as they can track each material with a fraction of the cost or the current system, as tampering is almost impossible with a Blockchain thus preventing any malicious change in patient records which helps to save a lot or money for the hospitals and no reconcilliation is required as everybody has the same ledger. Since it’s a shared distributed ledger, everyone’s copy gets updated without any glitches in an automated way.
Finance
Capital markets have many isues related to time, middiemen and also a complex process of back office trades. The whole process of capital markets can be taken over by Blockchain where we can create an asset trading platform. The users can then trade over the blockchain platform. We can also deploy smart contracts for the auto triggering of contracts which are to be sold and bought over the blockchain. A real-time reporting history could also be maintained for capital markets. The benefits of using blockchain are that you have increased transaction performance and reduced time span along with a provision of transparency of records over the blockchain. The performance for post-processing trade also improves automatically. This process also removes the repository, so you don’t have to trust a third party to make transactions within the capital markets.
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