Blockchain is the technology behind cryptocurrency, but it has many other potential uses. It is effectively a digital ledger that can accept various types of transactions. Effectively, any record can be stored on blockchain and once it is stored, it cannot be changed, altered, or deleted.
It uses cryptographic security and offers pseudonymous transactions and its decentralized infrastructure means there is no single point of failure within the system, and it makes hacking or subverting individual payments virtually impossible.
Blockchain Applications And Real-World Use Cases
Blockchain is most commonly used in the sending of payment from one party to another, in the form of cryptocurrency.
While the process was once somewhat clumsy and had the potential for human errors, many of these problems have been ironed out and businesses, ecommerce sites, and online casinos offer a simplified withdrawal process using popular cryptocurrency coins.
In fact, because cryptocurrency wallets do not require the same submission of personal information, crypto casinos can transfer payments more quickly thanks to a streamlined process, while still being licensed in viable iGaming jurisdictions.
Unprecedented Transparency
Blockchain networks can be viewed by anybody. If a user doesn’t know what they’re looking for, very little detail can be garnered from an individual record, but with information about wallet addresses and transaction values, they can check individual payments and overall receipts and transfers.
This transparency can enhance trust, but it also offers a degree of security. For example, an online casino can provide players with transaction details about a particular slot machine.
Players, and even third-party auditors, can check how much money has been staked on the game and how much has been paid out. It is possible to check that jackpots have been paid out as planned, giving a greater sense of trust for players.
Cryptographic Security
Blockchain records use cryptographic signatures for payments. Every payment has a private and a public key. The recipient receives the private key which effectively gives them ownership of the digital asset.
The key is retained by the holder and only sent when a smart contract to transfer the cryptocurrency is completed. The level of cryptography used in blockchain records is very high and this makes transactions more secure.
Various computers within the blockchain network must verify the keys, and if there is any anomaly with any of the keys, the payment is refused.
Pseudonymous Transactions
Although blockchain records are accessible and visible to anybody with details of the transaction: namely, the wallet address and the date and time of the transaction, payments are private.
Anybody viewing records on the blockchain network is only able to see the wallet address of the sender and recipient as well as the specifics of the transaction. They cannot see personal details like names, addresses, or other personally identifiable information. Not even IP addresses are visible.
This has led to many people calling cryptocurrency an anonymous payment method. However, with some cryptocurrencies, it is possible, through in-depth analysis, to identify the users involved in a transaction. Privacy coins can help get around this problem by using methods like ring signatures and spoof wallet addresses.
Immutable Records
The blockchain is immutable. This means that records and the specific details of any transactions are permanent. They cannot be deleted, nor can they be changed once the record is created and verified by the network.
This immutability has pros and cons. It makes transaction reversals, or refunds, more difficult, requiring the recipient to initiate a new transaction rather than just reversing the existing transaction. But it also means that the records can be accessed and their immutability, and permanent nature means they offer greater visibility and security to users.
Reduced Errors
Blockchain uses smart contracts. A contract is established when a transaction is first created. When certain stages or prerequisites of the transaction are met, the next stage progresses without human intervention. This automated process cuts down on possible human errors and ensures that transactions are more likely to be completed without problems.
Contracts can involve multiple steps and can be as simple as an exchange of a predetermined amount of cryptocurrency for an amount of another currency. Because the transaction isn’t complete until both funding sources are verified, it can also eliminate fraud and payment theft.
Decentralized Payments
Blockchain is decentralized which means information is spread across a network of unrelated computers and systems, or validators. No single system is aware of any of the other systems, which means they cannot pass information or collude in any way.
This prevents bad actors from combining to divert or subvert data, and it also means there is no single point of failure.
If a single point of the network goes down or is compromised, the rest of the network picks up the slack and completes the transaction as required. In this way, cryptocurrency payments can be more secure than traditional financial transactions.
Conclusion
Cryptocurrency is the best-known use of blockchain, but the digital ledger technology can be used to store and complete any form of transaction. As well as its use in decentralized finance, blockchain can be used in real estate, supply chain logistics, and even in the verification and validation of rare materials.
We have barely scratched the surface of how blockchain can be used, and we are likely to see further improvements in the technology’s security and other features in the future, too.
