What is blockchain technology and how does it work?
Many people view blockchain as the future of tech & data and believe it will kickstart the third generation of the internet. But what exactly is blockchain and how is it used? Read on for answers to all this and more.
Blockchain is a digital system of recording information across multiple computers with no central storage point. Because blockchain stores data in separate ‘blocks’, it is very difficult to change or hack.
You’re most likely to have heard about blockchain technology in reference to cryptocurrency systems, as the blockchain creates a decentralised and secure record of transactions. What do we mean by decentralised? No individual or group is running the show. The users of the blockchain collectively have control.
Blockchain technology was initially proposed as a research project in the early nineties, with its first major application of use being for Bitcoin in 2009. Since then, blockchains have been behind the creation of various cryptocurrencies, non-fungible tokens (NFTs) and legal contracts, while governments in countries such as Sweden are exploring blockchain-based land registries.
How does blockchain work?
A blockchain gathers the data into ‘blocks’, each one holding sets of information. Once the storage capacity of one block is filled, it closes, is timestamped, and will link up to the block filled before it, forming a chain. This format creates a timeline of data that cannot be reversed.
Different kinds of data can be stored within this system, but so far the primary use for blockchain technology has been for financial transactions.
The purpose of blockchain is to record and share digital information, without it being edited.
The transaction process:
- New transaction is entered
- Transaction transmitted to network of shared computers globally
- The network solves equations to confirm the transaction is valid
- When the transactions are confirmed, they’re grouped into blocks
- The blocks are chained together, forming a permanent record of transactions
Does blockchain work in Australia?
While cryptocurrency is not a legal tender in Australia and is generally not accepted as a form of payment, there are currently over a dozen blockchain startups and companies nationwide.
The Australian Government is ‘exploring the potential of this emerging technology’ and has developed a national roadmap with industry and researchers. Currently, there are pilot programs running in ethical minerals and the food and beverage sectors. Working groups have also been established in Cyber Security, supply chains, credentialing and regtech.
What is blockchain technology used for?
Blockchain technology has a wide range of uses with many industries maximising on the possibilities offered. We’ve rounded up some of the top uses across different sectors.
Blockchain in healthcare
The healthcare sector unfortunately remains top of the charts for data breaches in Australia, alongside the finance industry.
It therefore comes as no surprise that a major benefit of blockchain technology for healthcare is the ability to keep medical data safe and secure. Patient records can be encrypted and transferred, as can other medical data. Blockchain also supports the management of the medication and medical equipment supply chains, as well as efficient and accurate claims processing.
Another benefit is the decentralised set up of blockchain technology, which creates a single ecosystem of patient data, enabling medical professionals and patients alike to access the same information across the board with safety and ease.
Blockchain in supply chain management
Among the top perks of integrating blockchain tech with supply chain management systems:
- Improve supply chain transparency
- Boost traceability/tracking
- Reduce administrative costs
- Decrease losses from counterfeit trading
By recording all supply chain data within a blockchain, such as product quantity, quality, cost, and any other relevant details, the management of the overall supply chain is much more efficient and accurate. This can benefit the reputation of the company, improve productivity and output and positively impact the business bottom line.
Blockchain in banking
Set to change the future of banking systems globally, blockchain tech can enable several welcome advancements, including:
- Increased security and fraud protection
With a clear audit trail created via blockchain data, it is almost impossible to edit information once it has been loaded to the chain. This aspect of the technology, along with the fact it is decentralised, means hackers aren’t able to mess with data without leaving a trail of evidence in their wake. This is positive news given the tidal wave of ransomware attacks and cybercrime.
- Faster and cheaper international transfers
Historically, transferring funds internationally involves third parties who take a cut while the transfer itself can take days. Blockchain introduces direct transactions, removing the middle parties, speeding the process up and saving you money.
Blockchain in agriculture
Similar to the benefits of blockchain tech in supply chain management, it aids the agriculture sector by improving the traceability of data in the food supply chain, which increases safety measures. Details from the quality of seeds, to crop growth can be recorded and tracked, while industry issues such as illegal or unethical production can be detected, along with potential contamination.
The key areas for the use of blockchain technology in agriculture are sustainability and food security, along with it being able to support development of innovation for farming practices.
How can I learn blockchain technology?
Before you can work with blockchain, you’ll need to break into the world of tech and data. Gaining hands-on, industry-focused training is one of the best ways to kickstart a career in these industries. Academy Xi offer flexible training options in the following areas:
Want to chat with a course advisor? Our experienced team is here to discuss your training options and help you find the perfect course. Speak to a course advisor today and take the first steps in your tech and data journey.