Back to Resources

EDUCATION
In the Know: Understanding Blockchain

IN THE KNOW

January 2019

 

Learn how blockchain technology can help businesses instantly share, secure, verify and store records both internally and with third parties.

WHAT IS BLOCKCHAIN TECHNOLOGY AND HOW WILL IT IMPACT BUSINESSES?

The internet, smartphones and other online technologies have helped businesses streamline their supply chains and inventories. However, human error, software incompatibilities between vendors and a lack of transparency can cause even the most efficient operations to experience time-consuming and costly errors.

Online cryptocurrencies like bitcoin depend on a technology called blockchain that can instantly share, secure, verify and store records simultaneously. As a result, many businesses are using blockchain systems to implement efficient and secure recordkeeping systems.

Understanding How Blockchain Works

Blockchain is a new type of shared, encrypted recordkeeping system that can be seen in real time by everyone involved in a supply chain or other business operation. These systems work by recording a separate record, or “block,” every time a process is updated.

Essentially, each block in the system serves as a digital puzzle piece that verifies the next record, creating a digital chain. Each block is encrypted and can’t be changed, since altering any information in the record would be like taking a piece out of a finished puzzle and trying to change its shape.

Understanding the Advantages

Because each stakeholder in an operation keeps a separate copy of blockchain records, the systems allows for a large amount of transparency and communication. Businesses can also customize how users see information in a blockchain system. For example, an online retailer could let a customer view their orders and shipping statuses, but not their full inventory system.

Blockchain technology can give businesses an instant picture of both large and small-scale operations, such as a single product’s location or real-time sales figures. And since records can’t be altered or viewed without permission, they’re extremely safe from cyber attacks and data breaches.

Understanding the Potential Applications

Here are some of the potential benefits of a blockchain management system:

  • Flexible scalability—A business can use a blockchain system internally to track projects and other workflows, or multiple organizations can share the platform to organize large-scale operations.
  • Security—Records that use blockchain are encrypted, verified and shared between all users. As a result, blockchain is very secure against tampering and cyber attacks.
  • Transparency—Advanced sensors and other tracking technology can update blockchain records to give businesses an ongoing view of a supply chain without fear of human error or biased reporting.
  • Innovation—New services are beginning to automate complex systems like contractual obligations, employee security credentials and personal data protection using blockchain technology.
  • Detailed analytics—Businesses can track individual products to gather important information at any time, such as the origin of a dysfunctional product or a food item’s expiration date.

 

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2010 Zywave, Inc. All rights reserved.