Every few decades a new technology is invented which changes the way business is done. While still in its infancy, blockchain is one of those technologies. Blockchain is an electronic ledger or database of transactions that’s shared among a network of computers called nodes. New transactions are added to blocks on the ledger, verified, stamped, and protected by mathematical functions. All of the computers on the network can use their processing power and mathematics to decode and verify transactions on the blockchain.
When people perform a transaction in the real world, they need to trust that one person pays the other, and one person receives goods or services. Most of the time, third parties such as banks, brokers, and payment processors, to name a few, are needed to verify that the transaction happens the way it is intended. What makes blockchain technology very interesting for businesses is that third parties between transactions aren’t needed anymore. This is due to the technical details underlying the technology.
The idea behind blockchain can be traced back to the early 1990s, but it gained huge popularity starting in 2008 as the technology was refined and used to implement the famous cryptocurrency known as Bitcoin. The technology is already disrupting payment processing and investing but has far wider applications. Industries and services that will be affected by blockchain in the near future include accounting, audits, tax filing, crowdsourced insurance, and regular banking, as well as voting, cyber-security, charity, healthcare, online music, and real estate.
Blockchain is definitely here to stay and is piquing the interest of national governments, large businesses, and entrepreneurs. As a small business owner, blockchain is something you should keep an eye on. It’s likely to change the way you do business over the next few years.