Blockchain is a tech term you hear a lot these days. Frankly, it’s complicated. Even trying to explain it gives me a headache. That’s why I’m offering up a guest post from Jenna Tropea and the folks over at Bankrate.
We love the way Block Geeks explain how blockchain technology works – “Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”
Blocks on the blockchain are comprised of digital pieces of information that exist in three parts. The first is stored information about transactions like date, time and dollar amount of a purchase. The second is stored information about who is participating in those transactions. The third is stored information that distinguishes one block from all other blocks.
According to Investopedia, in order for a block to be added to the blockchain, four things must happen:
- A transaction must occur
- The transaction must be verified
- The transaction must be stored in a block
- That block must be given a hash, or a unique code
There are many advantages to using blockchain technology including improved accuracy by removing human involvement, greater user privacy and security, lower processing fees, and decentralization that makes it harder to tamper with the technology.
Blockchain is currently used by a variety of industries for many different reasons. Some real-world uses include connecting musical artists and licensing agreements (Spotify), keeping track of status and condition of every product in a supply chain via a shared record of ownership and location (IBM Blockchain), and even translating key insurance industry processes into blockchain-ready procedures (Accenture). However, the opportunities for blockchain are truly endless.
If this is all still making your head spin, you can read more about how this tech can be applied to industries like insurance by clicking here.