Origins of blockchain
Blockchain first emerged as the underlying technology and shared public ledger for recording bitcoin (the world’s first all-digital currency) network transactions. The creators conceived a trusted, peer-to-peer currency system that would operate independently from banks and governments, is immune to political and economic fluctuations, and exchangeable throughout the world without the need for intermediaries. Throughout the past few years, bitcoin gained wider acceptance beyond its first designation as a cryptocurrency, which led to significant blockchain advancements for mainstream enterprise applications across industries.
Inside Distributed Ledger Technology (DLT)
On its own, blockchain is an independent, universal digital ledger for recording various digital event transactions executed by participating parties. Blockchain’s core technology uses cryptography as well as distributed database architecture and a peer-to-peer protocol to create shared ledgers among different parties. Each transaction in the ledger is verified via consensus of participants in the blockchain network. Once captured, the information in the blockchain cannot be altered, manipulated or erased. The distributed ledger chronologically stores information in “blocks,” thus assigning a veritable record of each participating transaction, as well as recording the execution sequence.
What makes blockchain unique is the absence of a central authority or a third party requirement for overseeing transactions. Traditionally, financial transactions such as money transfers or stock purchases required a third party to manage, validate and record these activities. In a blockchain, in order to execute any transaction, which is to be accepted by the rest of the network, a participant must show a proof of work, which protects the information’s integrity and prevents fraud.
Smart contracts on blockchain
Now that blockchain is evolving past its early cryptography and fintech origins, distributed consensus ledgers present a secure and reliable environment for executing smart contracts and have the potential to radically redefine contract management. Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that make a contractual clause unnecessary. Beyond creating time and cost efficiencies by removing the legal and financial intermediary in a contractual agreement, blockchain acts as a trusted liaison, perfect for running smart contracts, where cryptographic mechanisms can be added for integrity.
Blockchain IP protection solutions
In manufacturing, when it comes to gaining a competitive advantage (e.g. safeguarding industrial know-how practices and copyrighted material), protecting intellectual property rights is paramount. Copyright protection generates trillions of revenue worldwide but the underlying registration process is time-consuming and costly. Blockchain and timestamping services have the potential to revolutionise copyright and patent filings and can be used to create a verifiable, time-stamped ownership trail from creation through to the transfer of rights and beyond.
Enterprise collaboration revisited
Today, office collaboration tools are changing the entire nature of knowledge work and management inside enterprises. But there are clear limitations to the current suites of applications, as they still require the involvement of central intermediaries to establish trust and coordinate processes. This creates an opportunity for blockchain-based systems to create ownership of employee and company personal and professional data and thus keep it consistent and accurate at all times.
Blockchain has its advantages and drawbacks, including high integrity at the price of information reliability. How data is recorded on the blockchain is considered critical and requires a trusted third party to record transactions and thus guarantee information reliability. Because this capability isn’t built into the technology by default, this additional resource or the usage of a secure tracking device is still necessary to maintain the trustworthiness of records. Once this information reliability limitation is surpassed, trust in blockchain implementations will increase and so will its usability and applications.
Adopting blockchain in your enterprise
By now, you are probably aware that plugging into an existing blockchain setup or devising your own can have unexpected benefits for your organisation as well as your customers, partners, suppliers and vendors. Whether you want to redefine your contract management, IP protection or internal collaboration, there are rewards to be reaped when the move to utilising blockchain technology is properly executed. This is best accomplished by an advanced IT team or outsourced to an experienced technology company, which can skillfully take advantage of DLT on your behalf. PegusApps’ team of experienced software engineers possesses the skills and knowledge to help build and implement blockchain applications.
Get in touch for a discussion on how distributed ledger technology can be reliably integrated into your manufacturing, financial, legal or supply chain operations.
Copywriter: Ina Danova