Most people have become acquainted with blockchain in the context of Bitcoin since that’s when the technology first came to the public’s attention. Also, Bitcoin remains to this day one of the most important, and definitely the most popular, innovations powered by blockchain, which is why the distributed ledger’s history is inextricably tied to cryptocurrencies.
However, the two concepts shouldn’t be equated. First of all, the birth of blockchain precedes the emergence of Bitcoin as the technologies on which the ledger is based have been many years in the making. Secondly, and most importantly, over time blockchain has evolved outside the limited sphere of cryptocurrencies and today its uses go far beyond the trading of financial assets.
Lately, government institutions and companies in all industries have taken a special interest in blockchain platforms, using them as a way to enhance transparency and streamline a series of operations and processes. There’s a wide array of blockchain applications that hold huge potential for organizations in every sector of activity, providing solutions to problems that have become increasingly difficult to tackle using traditional systems.
A large number of enterprises, from startups to insurance companies or banks have already integrated blockchain functionalities into their business model, and many others are planning to follow the same path in the near future. And that’s how the technology that lies at the heart of Bitcoin and other digital currencies came to be deemed a powerful tool that can radically transform the business environment.
Blockchain technology explained
In order to understand how blockchain can benefit businesses and organizations, it’s necessary to shed some light on what the technology entails and how it functions. Blockchain can be described as a distributed ledger or virtual database secured by cryptography where transactions from multiple decentralized sources are recorded and stored in a digital format. The fact that the blockchain network comprises peer nodes that validate transactions among each other completely eliminates the need for third-party verification.
Blockchain technology has a complex structure and involves a multistep process, but it all boils down to several key features. When two parties decide to conduct a transaction via blockchain – whether that implies the transfer of a digital currency or a different type of asset – the data resulting from that transaction creates a block, along with data from other transactions. Every computer node involved in the action is sent a copy of the block and is required to verify and authenticate the transaction by solving complex mathematical equations, and thus a consensus is reached.
The blocks that have been verified will receive a random number called the nonce and that will generate a permanent number for the block, called the hash. Each block’s hash is linked to the previous block’s hash, in a sequence that creates a chain of immutable and tamperproof blocks. The transaction is finalized only after all these steps have been completed.
The best blockchain platforms for business
Given its unique characteristics, blockchain technology has moved away from the cryptocurrency realm and stepped into the business landscape. It’s become obvious that blockchain’s immutability, security, transparency, and decentralization could help companies in various ways, streamlining their supply chain, increasing efficiency, or improving financial transactions.
However, in order to reap the benefits that the distributed ledger provides, businesses have to choose the right blockchain platform where they can build their applications. There are various blockchain platforms providing multiple opportunities for business to step up their game, each of them with its specific features and benefits, so we’re going to focus on the ones that enjoy the greatest popularity at the moment.
Ethereum is a decentralized blockchain platform created by programmer Vitalik Buterin in 2013, building on the legacy of Bitcoin, but expanding into many other spheres compared to the original digital currency. While Bitcoin was interned to serve as a medium of exchange, Ethereum was envisioned as a platform that facilitates the creation of an entire host of applications. As such, Ethereum established itself as the leading platform for generating smart contracts and building decentralized applications (dApps).
Ethereum also has its own native token, called Ether (ETH) which sometimes causes confusion among users as the two terms are often used interchangeably. So, when you hear about Ethereum or ETH price, people actually refer to the price of the token, not the blockchain platform that the digital currency is built on. Ethereum also serves as a host for other crypto projects, but what makes it truly unique is the ecosystem of business applications for finance, advertising, supply chain management, gaming, etc. built around the platform.
Founded in 2015, Cardano is another popular blockchain platform that uses a proof-of-stake methodology to achieve consensus and validate transactions, requiring only the involvement of network participants in the verification process, without the need to run checks at every node. Just as the previously mentioned distributed ledger, Cardano also has an internal cryptocurrency called Ada and is mainly focused on smart contracts and dApps that promote efficiency and scalability.
The similarities between Ethereum and Cardano are explained by the fact that the platform was created by Ethereum co-founder Charles Hoskinson. However, Cardano is not a copy, providing an eco-friendlier option due to its PoS model. It’s a sustainable, transparent, and extremely secure technology that allows businesses to build highly efficient applications that serve their unique needs.
Solana is a well-known blockchain platform used by many companies looking to build decentralized applications. In this respect, it’s quite similar to the other two blockchains, but the difference lies in the fact that Solana is an open-source project maintained by the Geneva-based Solana Foundation. Probably the greatest advantages that Solana provides, compared to other platforms, are the speed of operation and lower fees. Its PoS model also makes it a more appealing option for businesses looking to embrace sustainability while streamlining their operations.
With the blockchain world evolving at a fast pace, we’re bound to see many other platforms rise to fame in the years to come, so it remains to be seen which of them will hold their ground.