Blockchain is a type of distributed ledger where value-exchange transactions are sequentially grouped into blocks. These blocks are chained and recorded in a peer-to-peer network. According to Harvard Business Review, there are five principles on how blockchain works:
- Distributed database
- No single party controls the information or data.
- Peer-to-peer transmission
- Communication occurs directly between peers.
- Every transaction is visible to those on the network.
- Irreversibility of records
- Transactions are recorded and may not be altered.
- Computational logic
- Users may set up algorithms for transactions.
Through blockchain technology every process, payment, task, or agreement is recorded and is protected from deletion.
“Blockchain is a foundational technology: it has potential to create new foundations for our economic and social systems.”
Blockchain technology includes bitcoin and smart contracts and provides a platform for IP creators (inventors) to get the value of their creations including protecting their digital artwork, music, and more.
At present companies are utilizing blockchain to track items and for business record-keeping. Changes to documents on the blockchain are replicated across ledgers and create identical databases so all parties may view the updated documents. In this way, they are secure and verifiable.
Further, Smart contracts have been deemed the most transformative blockchain application in that automated payments and other currency transfers are initiated as negotiated conditions are met in a self-executing way.
Such transformative applications will give rise to new platforms and create a new ecosystem of digital business growth.