Blockchain, once overlooked in the shadow of cryptocurrency, is now a powerhouse player in its own right with implications far beyond the financial sector. From improving supply chain integrity to facilitating transactions for a wide range of digital assets, its use cases are vast and varied.
But what lies at the heart of this innovative technology, and how can it be harnessed? It is helpful for enterprises across many industries to understand the fundamentals of blockchain and how key platforms like Ethereum and Solana are leading the charge in this technological revolution.
What is blockchain?
Blockchain is digital ledger technology that documents transactions across a network of computers. It can log and track everything from cryptocurrency payments to real-world assets to legal agreements.
Blockchain technology is renowned for its security and immutability. The technology’s name stems from the fact that it’s comprised of a series of “blocks,” with each containing transaction data, a timestamp and a cryptographic hash of the previous block. Every transaction is linked in a “chain” and distributed across numerous nodes.
Because of the decentralized nature of the blockchain, there’s little risk of manipulation from entities like governments or financial institutions. In fact, a blockchain’s structure makes it nearly impossible to retroactively alter any single record without changing all subsequent blocks.
Blockchain technology offers transparency and decentralization, making it an attractive option for transactional applications—among them, money movement, supply chain management and even digital identity verification.
Ethereum and Solana
Within blockchain technology, there are many different blockchain platforms. Two of the most prominent blockchain platforms are Ethereum and Solana, each with unique features and capabilities.
- Ethereum (ETH): Ethereum, launched in 2015, is both a cryptocurrency and a platform for building decentralized applications. Ethereum introduced the concept of “smart contracts,” or self-executing contracts with the terms of the agreement written directly into lines of code. The latest iteration of Ethereum’s blockchain is secured using a proof-of-stake (PoS) consensus mechanism—essentially, the process by which validators create new blocks. (Learn more about consensus mechanisms and how they work here.)
- Solana (SOL): Solana is a newer blockchain platform that launched to the public in 2020. It’s known for speed and efficiency. It employs a unique hybrid consensus model, combining proof-of-history (PoH) with proof-of-stake (PoS). This enables it to process transactions rapidly and with lower fees compared to Ethereum. As such, Solana is an attractive platform for high-frequency trading and other applications requiring quick transaction times.
Ethereum and Solana have gained popularity because they offer solutions to common pain points related to scalability, speed and cost. These platforms have also sparked an entire ecosystem of subsequent innovation: Ethereum’s smart contract functionality has given rise to decentralized applications (dApps), decentralized finance (DeFi) platforms and non-fungible tokens (NFTs).
The future of finance: instant transfers and more
Imagine a world where international suppliers are paid the moment goods are shipped, employees receive compensation in real-time and complex financial transactions are settled instantly. This immediacy not only streamlines business operations, but also opens doors to new financial strategies like dynamic pricing. The ripple effects of such capabilities include more agile, responsive and competitive businesses and a transformation of the way global commerce operates.
Blockchains like Ethereum and Solana have the potential to make such hypotheticals into realities. With their ability to power instant, 24/7 financial transactions across borders, blockchains may be particularly attractive to enterprises operating in multiple countries or those engaging in high-volume trade, not to mention the implications for sectors like e-commerce and digital supply chain management.
Blockchain technology is evolving rapidly. Many enterprises need a hand when it comes to adopting it and maximizing its potential and a trusted partner can help you seamlessly integrate blockchain into existing operations.
Blockchain is transforming the way we think about money, assets and transactions and is paving the way for new business models and strategies. With the right partners to help you navigate and implement blockchain systems, your business will be well-positioned to stay a step ahead in the digital finance era.