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Blockchain Technology – What You Need to Know

Boca Raton, Fla – August 30, 2018 – With the continued expansion of global e-commerce, the need for trust or the ability to authenticate every transaction that is being processed through the internet is a must.

How can trust/authenticity be improved for the billions of transactions that happen every minute, globally?

Blockchain Technology. Yes. This technology is not all about cryptocurrency. Its utility goes beyond the cryptocurrency market. Business owners and decision-makers will need to know the truth and most importantly the future of blockchain.

How does blockchain technology work?

It is a decentralized ledger based on blockchain, which in turn, is based on line of blocks and every one of these blocks is a tree of recorded transactions.

The key thing to remember here is a decentralized ledger can be anything of value that one or more parties will need to track and/or validate. So, it is not just cryptocurrency. When a series of blocks are pulled together, a blockchain is now formed. All information on that blockchain can be encrypted and secured if desired. Another key thing here is that the blockchain that was formed is now part of a public network. A blockchain does not have to be on a public network. It can be on a private network as well. This network has multiple nodes. Every node will retain a copy of that blockchain. To simplify this – this network should be considered as one distributed database. It is more or less a data structure, that has been established, which makes it nearly impossible to change at a later date without altering.  Because the hashing algorithm of a block consists in part of a hash of the previous block, and that block has a hash of the previous block before that, this makes it difficult as the time passes to inject into some other blocks.

That blockchain can be validated by anyone at any time without giving up personal information.

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What are the possible utilities of blockchain for businesses in general?

There is currently a significant amount of use cases in this fast-evolving space. For example, a small business will be able to receive payments for work completed through its digital wallet. Another key thing to remember here is blockchain does not equal to cryptocurrency, it is meta-level – cryptocurrencies are based on the blockchain concept; digital wallet is a trait of currency, it has nothing to do with blockchain. An even more important note, there can be currencies without the wallet capability.

Doing business with partners on a network will become a more trusted endeavor, as everyone on that network will have the needed validation available. Therefore, a small business, with blockchain, will be able to avoid the exposure of future fraudulent transactions. Another way this technology is being used today is when multiple parties enter into an agreement and the instrument was processed through an e-signature platform, the parties involved will have the ability to prove the identity of the stored document. In this data structure, only the hash of the document file is stored, then anyone can compute the hash of that file again using a well-known algorithm to validate the existence of such hash in blockchain. So, when the executed document is published to the blockchain, it can be run through a cryptographic hashing algorithm, which produces a short hash for the executed document. If any successful attempt was made to even remove a single word in the document, the hash of the document will be totally different. Therefore, eliminating any attempt for fraudulent activity.

What are the current drawbacks of blockchain?

At this juncture, the network capacity is the main issue. The BITCOIN network can only process seven (7) transactions per second (TPS). The size limit for a block is only one megabyte (1MB). Today, the major credit card merchants can process at least 1,700 TPS

The BITCOIN community is currently working on this important issue and progresses are already being recorded where a block has grown from 1MB to 8MB. It seems that this issue will soon be resolved. The blockchain technology is disruptive. It is here to stay. It may be the technology that will provide the ultimate transparency that is truly needed in the e-commerce space alone. The cost avoidance in terms of fraudulent transactions that may be generated have not yet being assessed; however, one could predict that number will be in the billions of dollars.

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Article by SignOnTheGo® published in Small Business Concierge Magazine

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