Software in this category is based on the blockchain or distributed ledger technology (DLT) to provide a range of services around authentication, verification, traceability, proof of ownership, proof of origin, and others. Blockchain software is often based on public participation in the audit and confirmation steps to verify transactions of online or offline goods and services. Blockchain technology is used for cryptocurrencies but the use case goes beyond this, with applications in almost all industries, ranging from mining, manufacturing, real-estate and government public records to finance, insurance, energy, advertisement, Internet-of-Things (IoT), and cloud computing. A common example is tracing a part for a product in a distributed ledger (DL) in a supply-chain, where every station the part is handled on is signed on to the blockchain to track the source of the part, the handling stations, the final product it was used in, locations it went through, etc. Some of the applications in the category might still be in beta stage or do not offer full functionality. Read the full software guide...
A blockchain is an incorruptible digital ledger, which is a distributed ledger originally used for economic transactions that can be programmed to record data, ranging from financial transactions to anything and everything of value.
The blockchain is essentially a burgeoning set of records, known as blocks, which are linked or secured together via cryptography. Public blockchains are readable by anybody and are widely used in cryptocurrencies.
Private blockchains, on the other hand, have become quite common in various industries and are starting to gain traction in the world of business. For most businesses and organizations, the blockchain is often referred to as distributed ledger technology (DLT).
Blockchains are electronic ledgers that can be shared openly among different users. The technology is designed to create an unchangeable record of each individual transaction.
Every time data changes hands, it is time stamped and linked to the previous user. As such, each digital record of the transaction serves as the thread that links the blocks together, hence the term blockchain.
The technology allows for open or controlled user sets to participate in the electronic ledger, making it quite useful for business transactions and other applications. Again, each block is linked to a specific participant or user.
Blockchain, or DLT, is not a new technology. It is actually a combination of proven technologies that have existed for some time and are essentially applied in a new way. You can effectively compare it to the internet itself, which was originally designed for military use but has since evolved into something that affects the day-to-day lives of almost every person on the planet.
There are three fundamental technologies that blockchains make use of; private key cryptography, peer-to-peer (P2P) networks or the internet, and a specific program or protocol that governs incentivization. Combining these technologies to come up with new applications essentially gave birth to Bitcoin and other cryptocurrencies. Thereafter, following on from cryptocurrencies and their explosion in popularity, came other useful applications for distributed ledger technology.
There are three main types of blockchain networks: private blockchains, consortium blockchains, and public blockchains.
Public blockchains have no restrictions as far as public access is concerned. Any individual with internet connectivity will be able to theoretically join in the implementation of a consensus protocol, i.e. send and receive transactions as well as serve the role of a validator. A validator is an individual responsible for committing new blocks in the blockchain.
In general, a public blockchain offers economic advantages to individuals and organizations that are able to put in place a certain type of security and utilize an algorithm to show proof of stake or proof of work. A couple of good examples of public blockchains are Ethereum and Bitcoin.
Private blockchains work on a permission-based system. Unlike public blockchains, a private blockchain does not allow just anyone to join without authorization or an invitation from the designated network administrators. In this type of blockchain, validator and participant connections are limited.
This type of blockchain, or DLT, may also be considered as a middle ground for businesses and organizations, especially those that are involved in distributed ledger technology but are still reluctant or uncomfortable with the control scheme prevalent in public networks.
Usually, organizations that employ this type of blockchain technology are looking to incorporate DLT into their accounting processes without having to sacrifice independence and endangering sensitive company information and customer data.
The third type of blockchain, or DLT, is the consortium blockchain. The consensus on consortium blockchains is that they are semi-decentralized. Just like a private blockchain, this type of DLT is also permission-based. The difference, however, is that instead of being controlled by a single entity or organization, consortium blockchains allow several companies to run a node on the same DLT network.
There are many blockchain technologies, and adding to that is the fact that not a lot of people fully understand what a blockchain or distributed ledger technology even is. If you’re reading this guide, however, then it’s safe to say that you are interested in blockchain technology and that you already have a basic understanding of what this technology is.
So, now you’re trying to figure out which DLT solution or blockchain technology is best suited for your needs. Taking into account the three main types of blockchain networks mentioned above, the first step in finding the right DLT solution is to think about your needs. Why are you currently interested in blockchains? What is your purpose for considering this particular technology?
When choosing a blockchain for your business, there are a couple of things you need to understand. First, blockchain software solutions move and trade value quickly with minimal cost. Second, it creates nearly permanent data records of each individual transaction.
Now, what categories or important aspects should you look out for when choosing DLT software solutions for your organization? There are three fundamental aspects to consider: technical capability, governance, and community.
The technical capability of the blockchain network is important, especially when you consider the fast pace in which the technology is growing. Nowadays, things like smart contract functionality are especially important when incorporating blockchains into the world of business operations.
There are blockchain networks that may not have smart contract functionality built-in, but they do employ third-party solutions that allow for that specific feature. It is up to the organization to weigh the pros and cons of that approach.
Governance is another aspect that businesses need to look out for when choosing blockchain technologies. Just like when shopping for other types of business solutions, an organization has to make sure the product they invest into meets the standards not just of the company, but the industry they are operating in as well.
Community is another important factor to consider when finding the right blockchain network for your business. The term “community” in this scenario refers to the traction that the chain or network has in the mind-share of most developers.
You need to make sure before you invest in a particular blockchain, or any other software solution for that matter, that there is a constant or growing availability of developers engaged in furthering that particular technology.
Blockchain solutions, or distributed ledger technology (DLT), provide a wide range of services relating to authentication, verification, proof of ownership, proof of origin, and traceability, all of which are crucial in the world of online business.
Regardless of which type of blockchain network or DLT solution an organization opts for, there are a plethora of advantages the technology offers, from data security to minimized risk and more efficient business transactions. Furthermore, with functionalities like smart contracts, participants in blockchain networks won’t have to worry about authenticating and tracing ownership information.