Do Not Confuse Blockchain and BitcoinBitcoin is the gateway drug to understanding blockchain technology, but most people do not know the difference between the two. Basically speaking, Bitcoin was the first ever cryptocurrency and uses blockchain as its root technology. Blockchain is a crypto-encoded digital ledger that enables peer-to-peer transactions through its network. However, Bitcoin is a digital currency that uses the said blockchain technology to enable transactions between two people to take place without a third party such as a bank. Some people and businesses do not use blockchain because of the volatile nature of cryptocurrencies, but this has nothing to do with the blockchain technology itself, which is merely just the system on which each individual cryptocurrency resides. It is the virtual currencies themselves that are volatile in price, not the technology, which is due to a myriad of reasons.
What is DLT?Blockchain technology is a type of distributed ledger technology, more commonly known as DLT, which is revolutionizing the financial world and could replace banking institutions in the future. Known for its rapidly-evolving approach to recording and sharing data across multiple ledgers that are maintained and run by a distributed network of computer servers that are known as nodes, DLT technology is changing the economic world as we know it. Each node is a copy of the entire ledger system that updates the same info independently. This means that the DLT is essentially decentralized and not controlled by a single authority. Blockchain, however, is one form of DLT where entire blocks on the chain are grouped together, organized, and then linked to one another by the utilization of cryptography, hence the term 'cryptocurrency.' The blockchain is basically a list of growing and ongoing records. Although DLTs and blockchain are known for their anonymity, they are actually very transparent as everyone in the network can see the entire ledger, which can help to eliminate fraud and also third-party transaction fees that you receive from banks.
How Can Businesses Benefit from Implementing Blockchain?Now that we have a more simplified appreciation for blockchain technology, can you incorporate it into your current business model to increase productivity or profits? The answer is definitely maybe. It all depends on your own needs and requirements as a business. Here are some questions you need to ask yourself regarding your business to realize whether or not your company can benefit from implementing blockchain technology:
- Is your company transaction-based?
- Does your company benefit from public scrutiny?
- Are you looking to implement customer loyalty rewards?
- Do you deal in digital asset transfers such as digital art?
- Would your business benefit from a decentralized system?