So you are hearing this term everywhere. Every time you check the news, you see a new article about Bitcoin, cryptocurrency or block chain. Let’s start by breaking blockchain down to its core.
Let’s say you want to sell your iPhone. Currently you will likely use a platform such as Ebay which acts as an intermediary between you and the person to whom you want to sell. The payments might be processed via some bank which will cost you or/and the other person some money. With the introduction of blockchain, you will be able to sell to that person without actually involving Ebay or any other bank in between. That’s blockchain explained on very basic level.
Blockchain is essentially a network of computers, called nodes, which all have the same history of transactions. So instead of one company or a database which holds all the information, now the information is spread across whole of the network. Whenever a transaction occurs, that is validated by everyone and is put ahead in that history of transactions in that network. All the transactions are encoded using a technique called cryptography.
Now that you understand how a blockchain operates, let’s discuss the different platforms using blockchain.
Business Insider explains that arguably the greatest blockchain application for insurance is through smart contracts. Such contracts powered by blockchain could allow customers and insurers to manage claims in a truly transparent and secure manner. All contracts and claims could be recorded on the blockchain and validated by the network, which would eliminate invalid claims. For example, the blockchain would reject multiple claims on the same accident.
Recent polls indicated that public trust in charities is at a record low. Business Insider suggests that the blockchain could solve that problem through transparency by showing donors that NPOs are in fact using their money as intended. Furthermore, blockchain technology could help those nonprofits distribute funds more efficiently, manage their resources better, and enhance their tracking capabilities.
Don’t be overwhelmed by the buzz around blockchains and Bitcoin. Now that you have a firm grasp of what a blockchain is, the rest will fall into place naturally!