Blockchain for Business Explained
Blockchain for Business is a distributed, decentralized, public ledger, the record-keeping technology behind the Bitcoin network. It is literally a chain of blocks, but not in the traditional sense – Blockchain is the digital information (the “block”) stored in a public database (the “chain”).
“Blocks” on the blockchain are made up of digital pieces of information which have three parts:
- Blocks store information – the date, time, and dollar amount of your transactions.
- Blocks store information about who is participating in transactions. Instead of using your actual name, your transactions are recorded without any identifying information using a unique “digital signature,” much like a username or an avatar.
- Blocks store information that distinguishes them from other blocks. You and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms.
A single block on the Bitcoin blockchain can store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.
How Blockchain for Business Works
When a block stores new data it is added to the blockchain, which consists of multiple blocks connected together. In order for a block to be added to the blockchain four things must happen:
- A transaction must occur. Let’s say that you exchange USD for Bitcoin, using the CryptoTT exchange, As we discussed above, in many cases a block will group together potentially thousands of transactions, so the USD to BTC exchange, you just completed, gets packaged in the block along with other users’ transaction information as well.
- That transaction must be verified. After making the exchange, your transaction must be verified. With other public records of information, like Wikipedia, or your local library, there’s someone in charge of verifying new data entries. With blockchain, however, that job is handled by a network of computers. When you complete your exchange through CryptoTT, that network of computers rushes to check that your transaction happened in the way you said it did. That is, they confirm the details of the purchase, including the transaction’s time, dollar amount, and participants.
- That transaction needs to be stored in a block. After your transaction has been verified, it gets the green light. The transaction’s dollar amount, your digital signature, and the CryptoTT digital signature are all stored in a block. There, the transaction is packaged with hundreds, or thousands, of others like it.
- That block must be given a hash. When all of a block’s transactions have been verified, it is given a unique, identifying code called a hash. The block is also given the hash of the most recent block added to the blockchain. Once hashed, the block is added to the blockchain.
When that new block is added, it becomes publicly available for anyone to view – including you. If you take a look at Bitcoin’s blockchain, you will see that you have access to transaction data, along with information about when (“Time”), where (“Height”), and by who (“Relayed By”) the block was added to the blockchain.
Is Blockchain for Business Private?
Anyone can view the contents of the blockchain, but users can also decide to connect their computers to the blockchain network as nodes. In doing so, their computer receives a copy of the blockchain that is updated whenever a new block is added, sort of like a TikTok Feed that gives a live update whenever a new video is posted.
Each computer in the blockchain network has its own copy of the blockchain, meaning that there are thousands, or in the case of Bitcoin, millions of copies of the same blockchain. While each copy of the blockchain is identical, spreading that information across a network of devices makes the information difficult to manipulate. This is why blockchain is called a “distributed” ledger. There is no single, definitive account of events that can be manipulated. Instead, a hacker would need to manipulate every copy of the blockchain on the network.
It is important to note that, when you view the public blockchain information, no one has access to identifying information about the users making transactions. Personal information about users is limited to their digital signature or username.
Is Blockchain for Business Secure?
Issues of security and trust are addressed in several ways. First, new blocks are always stored linearly and chronologically. They are always added to the “end” of the blockchain. For example, if you look at Bitcoin’s blockchain, you’ll see that each block has a position on the chain, called a “height.”
After a block has been added to the end of the blockchain, it is almost impossible to change the contents of the block. As we already mentioned, each block contains its own hash, along with the hash of the block before it. Hash codes are created by a math function that turns digital information into a string of numbers and letters. If that information is edited in any way, the hash code changes as well.
Why is that important to security? If a hacker attempts to edit your USD to BTC CryptoTT exchange, so that you have to pay for your exchange twice, as soon as they edit the dollar amount of your transaction, the block’s hash will change. The next block in the chain will still contain the old hash, and the hacker would need to update that block in order to cover their tracks. However, doing so would change that block’s hash. And the next, and so on.
In order to change a single block a malicious intruder would need to change every single block after it on the blockchain. Recalculating all those hashes would take an enormous and improbable amount of computing power. In other words, once a block is added to the blockchain it becomes extremely difficult to be edited and impossible to delete.
Can Blockchain for Business be trusted?
One of the most common examples employed by Bitcoin is called “proof of work.” In the proof of work system, computers must “prove” that they have done “work” by solving a complex computational math problem. If a computer solves one of these problems, they become eligible to add a block to the blockchain. But the process of adding blocks to the blockchain, what the cryptocurrency world calls “mining,” is not easy. In fact, the odds of solving one of these problems on the Bitcoin network were about one in 15.5 trillion in January 2020. To solve complex math problems at those odds, computers must run programs that cost them significant amounts of power and energy, which also means a significant amount of money invested in doing so.
Proof of work does not make attacks by hackers impossible, but it does make them fated to fail. If a hacker wanted to coordinate an attack on the blockchain, they would need to control more than 50% of all computing power on the blockchain to be able to override all other participants in the network. Given the tremendous size of the Bitcoin blockchain, a so-called 51% attack is almost certainly not worth the effort and more than likely impossible.
Blockchain and Bitcoin, what is the difference?
The goal of Blockchain for Business is to allow digital information to be recorded and distributed, while making it impossible to be edited. That concept can be difficult to understand so let’s review what makes the earliest application of blockchain technology tick.
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with. But it wasn’t until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.
The Bitcoin protocol is built on the blockchain. In a research paper introducing the crypto currency, Bitcoin’s creator Satoshi Nakamoto referred to it as “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
It works in the following way:
You have people, all over the world, who have bitcoin. There are likely many millions of people around the world who own at least a portion of a bitcoin. If one of those millions of people wants to spend their bitcoin on purchases the blockchain comes in.
When it comes to printed money, the use of printed currency is regulated and verified by a central authority, usually a bank or government—but Bitcoin is not controlled by anyone. Instead, transactions made in bitcoin are verified by a network of computers. This is what is meant by the Bitcoin network and blockchain being “decentralized.”
When one person pays another using bitcoin, computers on the Bitcoin network are quick to verify the transaction. In order to do so, users run a program on their computers and try to solve the complex mathematical problem, which we noted is called a “hash.” When a computer solves the problem by “hashing” a block, its algorithmic work will have also verified the block’s transactions. The completed transaction is publicly recorded and stored as a block on the blockchain, at which point it becomes uneditable. In the case of Bitcoin, and most other blockchains, computers that successfully verify blocks are rewarded for their labor with cryptocurrency. This process is referred to as “mining.”
While transactions are publicly recorded, user data is not recorded in full. In order to conduct transactions on the Bitcoin network, participants must run a program called a “wallet.” Each wallet consists of two unique and distinct cryptographic keys: a public key and a private key. The public key is the location where transactions are deposited to and withdrawn from. This is also the key that appears on the blockchain as the user’s digital signature.
Even if a user receives a payment in bitcoins to their public key, they will not be able to withdraw them with the private counterpart. A user’s public key is a shortened version of their private key, created through a complicated mathematical algorithm. Due to the complexity of this equation, it is almost impossible to reverse the process and generate a private key from a public key. For this reason, blockchain technology is considered confidential.
Public and Private Keys
You can think of a public key as your safe and the private key as the combination to that safe. Since in this case, your safe is public, anyone can insert letters and notes through the locker. However, the only person that can retrieve the contents of the safe is the one that has the unique key. It should be noted, however, that while the safe combinations are kept on the network, there is no central database that keeps track of a blockchain network’s private keys. If a user misplaces their private key, they will lose access to their bitcoin wallet. There have been numerous cases of lost wallets, so make sure to read our section on how to best secure your wallet.
Blockchain for Business Real Life Applications
Blocks on the blockchain mainly store data about monetary transactions. With time however, we found that blockchain is a reliable way of storing data about other types of transactions, as well. In fact, blockchain technology can be used to store data about property owners and exchanges, transportation of goods, supply chains, and even votes for a candidate.
1,000 companies across seven countries were questioned about integrating Blockchain for Business into their business operations recently. 34% already had a blockchain system in production today, while another 41% expected to deploy a blockchain application within the next 12 months. In addition, nearly 40% of the surveyed companies reported they would invest $5 million or more in blockchain in the coming year. It is also important to note that countries like China have integrated blockchain research and application into their government goals and giants such as MasterCard and Visa are also looking closely into entering the space.
Here are some of the most popular applications of blockchain being explored today:
Banks would arguably face the biggest disruption from blockchain, yet they also have the most to gain from it. Financial institutions only operate during business hours, five days a week. That means if you try to deposit a check on Friday at 6 p.m., you likely will have to wait until Monday morning to see that money hit your account. Even if you do make your deposit during business hours, the transaction can still take one to three days to verify due to the sheer volume of transactions that banks need to settle. Blockchain, on the other hand, never sleeps.
By integrating blockchain into banks, consumers can see their transactions processed in as little as 10 minutes, basically the time it takes to add a block to the blockchain, regardless of the time or day of the week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely. In the stock trading business, for example, the settlement and clearing process can take up to three days (or longer, if banks are trading internationally), meaning that the money and shares are frozen for that time.
Given the size of the sums involved, even the few days that the money is in transit can carry significant costs and risks for banks. Capgemini, a French consultancy, concluded that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications. Santander, a European bank, put the potential savings at $20 billion a year.
Blockchain is the cornerstone for cryptocurrencies like Bitcoin and Etherium. Currencies like the U.S. dollar, Euro and TTD are regulated and verified by a central authority, usually a bank or government. Under the central authority system, a user’s data and currency are technically at the whim of their bank or government. If a user’s bank collapses or they live in a country with an unstable government, the value of their currency may be at risk. This is certainly something that we have seen in the Caribbean and beyond. These are the precautions and fears out of which Bitcoin and Decentralised Financing were born.
By spreading its operations across a network of computers, blockchain allows cryptocurrencies to operate without the need for a central authority. This reduces risk and eliminates many of the processing and transaction fees. It also gives those in countries with unstable currencies a more stable currency with more applications and a wider network of individuals and institutions they can do business with, both domestically and internationally.
Using Blockchain for Business in Trinidad and Tobago and abroad
No matter the size of your Business in Trinidad and Tobago, as well as in the Caribbean and beyond, you can benefit from avoiding daily or monthly transaction restrictions, whether it is bank transactions or PayPal transactions. If you need to purchase goods and services from abroad and are looking for a better, more efficient, unrestricted and safe way to do it – you can simply contact our consultants here at CryptoTT as we will make sure to find the best option for you.
One of the biggest concerns of Healthcare providers is securely storing their patients’ medical records. Blockchain is here to solve that problem. When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be altered. These personal health records can be encoded and stored on the blockchain with a private key, so that they are only accessible by certain individuals, guaranteeing privacy.
The process of recording property rights is both troublesome and inefficient. Today, a physical deed must be delivered to a government employee at the local recording office, where it is manually entered into the county’s central database and public index. In the case of a property dispute, claims to the property must be reconciled with the public index.
This process is not just costly and time-consuming—it is also prone to human error, which makes tracking property ownership less efficient due to inaccuracies. Blockchain can eliminate the need for scanning documents and tracking down physical files in a local recording office. When property ownership is stored and verified on the blockchain, owners can trust that their deed is accurate and permanent.
A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out.
Say, for example, I’m renting you my beach house using a smart contract. I agree to give you the door code as soon as you pay me your deposit. Both of us would send our portion of the deal to the smart contract, which would hold onto and automatically exchange my code for your deposit on the date of the rental. If I don’t supply the door code by the rental date, the smart contract refunds your security deposit. This bypasses the fees that accompany using a notary or third-party mediator, such as AirBnb or your local rental website.
Suppliers can use blockchain to record the origins of goods or materials that they have purchased. This would allow companies to verify the authenticity of their products, along with health and ethics labels like “Local,” “Eco Friendly”, “Imported” or “Organic”.
Forbes has reported that the food industry is moving into the use of blockchain to increasingly track the path and safety of food throughout the entire journey of the product.
It was tested in the Nov. 2018 midterm elections in West Virginia that voting with blockchain can eliminate election fraud and boost voter turnout. Each vote can be stored as a block on the blockchain, making them nearly impossible to tamper with. The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and provide officials with immediate results. Of course there is also a reason that many countries avoid the inherent transparency of voting, that blockchain can secure.
Blockchain for Business Advantages
Here are the selling points of blockchain for Trinidad and Tobago, as well as Caribbean businesses on the market today:
Consumers need to pay a bank or another payment system like PayPal or Revolut to verify a transaction or a notary to sign a document. Blockchain eliminates the need for third-party verification and, with it, their associated costs. Business owners incur a small fee whenever they accept payments using credit cards, for example, because banks have to process those transactions. Bitcoin, on the other hand, does not have a central authority and has virtually no transaction fees. Which means that right from the start, utilising blockchain eliminates a large portion of your annual transaction and contract costs.
Transactions placed through a central authority can take up to a few days to settle. If you attempt to deposit a check on Friday evening, for example, you may not actually see funds in your account until Monday morning. While financial institutions operate during business hours, five days a week, causing many restrictions, blockchain is working 24 hours a day, seven days a week. Transactions can be completed in about ten minutes and can be considered secure after just a few hours. This is particularly useful for cross-border trades, purchasing goods and materials, as well as paying for labour and services, which usually take much longer because of time-zone issues and the fact that all parties need to confirm payment processing.
Once a transaction is recorded, it must be authenticated and verified by the blockchain network. Millions of computers on the blockchain race to confirm that the transaction details. After a computer has validated the transaction, it is added to the blockchain in the form of a block. Each block on the blockchain contains its own unique hash, along with the unique hash of the block before it. When the information on a block is edited in any way, that block’s hash code changes but the hash code on the block after it would not. This discrepancy makes it extremely difficult for information on the blockchain to be changed without notice.
Although personal information on the blockchain is kept private, the technology itself is almost always open source. The users on the blockchain network can modify the code as they see fit, so long as they have a majority of the network’s computational power backing them. Keeping data on the blockchain open source makes data tampering extremely difficult. With millions of computers on the blockchain network at any given time it is highly unlikely that anyone could attempt to make a change without being noticed.
Many blockchain networks operate as public databases, meaning that anyone with an internet connection can view a list of the network’s transaction history. While users can access details about transactions, they cannot access personal, or identifying information about the users participating in those transactions. It is a common misperception that blockchain networks like bitcoin are anonymous, when in fact they are confidential.
When a user makes public transactions, their unique code, which is called a public key, is recorded on the blockchain, rather than their personal information. Although a person’s identity is still linked to their blockchain address, this prevents hackers from obtaining any personal information, which is not the case if a bank or an online payment service gets hacked. It is not even the case when an online payment processor or a website that stores your personal information gets hacked. Which all leads to blockchain transactions giving you a lot more privacy and personal security than any other means of completing transactions.
Blockchain does not store any information in a single, central location. The blockchain is copied and spread across a vast network of computers. Whenever a new block is added to the blockchain, every computer on the network updates its blockchain to reflect the change. By spreading information across a network, rather than storing it in one central database, blockchain becomes extremely difficult to tamper with. Even if a copy of the blockchain fell into the hands of a hacker, only a single copy of the information would be compromised, instead of the entire network.
Personal and Group Coaching at CryptoTT
Your business in Trinidad and Tobago, as well as the Caribbean can only benefit from everything that blockchain has to offer. With so many companies, as well as governments, moving towards this new era of blockchain applications, it would only be wise to stay ahead of the curve.
If you need help understanding blockchain and more importantly how it can help your specific business to become more cost effective and efficient, you can book a personal coaching session. CryptoTT offers individual, one-on-one coaching as well as Group Coaching for your employees or team. These private sessions can cover anything from understanding blockchain, to managing your corporate transactions entirely through blockchain, hence lowering your expenses and opening up entirely new horizons for your business purchases and payments from and to any country in the world.