Blockchain

Definition

Blockchain is a decentralized digital ledger technology that securely records transactions across multiple computers in such a way that the registered transactions cannot be altered retroactively. This technology enables transparency, security, and traceability, making it a key player in emerging trends like cryptocurrency and supply chain management.

5 Must Know Facts For Your Next Test

1. Blockchain was originally developed as the technology behind Bitcoin, but its applications have expanded to various sectors, including finance, healthcare, and logistics.
2. Each block in a blockchain contains a set of transactions and is linked to the previous block, forming a secure chain that prevents tampering.
3. The consensus mechanism in blockchain, such as proof of work or proof of stake, ensures all participants in the network agree on the validity of transactions.
4. Blockchain enhances supply chain transparency by allowing all parties to track products from origin to delivery, improving trust among stakeholders.
5. With the rise of non-fungible tokens (NFTs), blockchain has also revolutionized the digital art and collectibles market, enabling unique ownership verification.

Review Questions

• How does blockchain technology enhance security and transparency in transactions compared to traditional systems?
  • Blockchain technology enhances security by using cryptographic hashing to link blocks of data in a way that makes them nearly impossible to alter without consensus from the entire network. This decentralization means there is no single point of failure or control, which greatly reduces the risk of fraud. Transparency is achieved as all participants in the network can view the entire transaction history, fostering trust and accountability.
• Discuss the role of smart contracts in the evolution of blockchain applications and their potential impact on business operations.
  • Smart contracts play a crucial role in evolving blockchain applications by automating agreements without intermediaries. They self-execute when predefined conditions are met, streamlining processes in areas like real estate, insurance, and legal agreements. This efficiency reduces costs and speeds up transactions, potentially transforming how businesses operate by minimizing human error and increasing trust between parties.
• Evaluate the implications of blockchain technology on global supply chains and how it could redefine logistics management.
  • Blockchain technology has profound implications for global supply chains by enhancing transparency and traceability throughout logistics management. It allows for real-time tracking of goods, enabling stakeholders to verify authenticity and compliance while reducing delays caused by information silos. This could lead to more efficient operations, reduced fraud, and improved relationships between suppliers and consumers as trust is built through verifiable data.

Related terms

Cryptocurrency: A type of digital or virtual currency that uses cryptography for security and operates on blockchain technology, enabling secure peer-to-peer transactions.

Smart Contracts: Self-executing contracts with the terms of the agreement directly written into code, which are stored and executed on a blockchain.

Decentralization: The distribution of authority and control away from a central authority, often associated with blockchain's ability to eliminate intermediaries in transactions.