Blockchain and Its Use Cases Explained for Beginners 

Databases and applications typically bring to our mind the server that maintains them in a centralized manner to provide accessibility to the users through connected computers and devices. This concept was changed by blockchain, a distributed database, meaning that the devices that use databases are not connected to a central processor or server but are connected to each other. Under blockchain, transactions are maintained as records in the form of blocks, each of them having a timestamp and a link to the previous block in sequential and chronological order. Confused? Let’s try with a real-life example. 

Typing on the internet, for example, will try to connect you to Google’s central server(s), providing you with the content you search for. However, if the Google server is down, you won’t see any content on your browser. In contrast, under the blockchain, even when one or more connected computers (nodes) in the network are down, you are not offline, because other computers or nodes that maintain the same database on the network are up and running. This is because the nodes in the network that are not down will communicate with each other. 



Blockchain was invented by a person or group of people, that is known by the mysterious name of Satoshi Nakamoto for creating the Bitcoin cryptocurrency. Unlike in the case of fiat or paper currencies such as the US Dollar, Euro, Indian Rupee, etc. which are controlled by the central bank of the country, there is no central authority that monitors and controls bitcoin or other blockchain-supported transactions. However, for new transactions to be added to the bitcoin database, at least 51% of the nodes must agree that the transaction is real and valid through the consensus mechanism. 


How Does Blockchain Work?

Blockchain technology that allows peer-to-peer transactions is decentralized  - not on a central server or controlled by a central authority - network that facilitates the transfer of digital assets such as currency and data. Let us imagine blockchain as a digital database, like a digital document, which is shared across a large network of many computers (nodes). Whenever the network validates and updates a transaction to the database, every computer or node on the network gets updated by the new transaction. 

Cryptographic techniques make it highly impossible for hackers to alter or reverse it unless a majority of the nodes (depending on the consensus algorithm used) in the blockchain give their consent. This is impractical because it is expensive. With the data stored on all the computers/nodes under the blockchain, there won’t be a risk of loss of data if one of the computers/nodes is hacked or broken. Adding any new transaction makes it necessary for the blockchain to go through a certain consensus mechanism such as proof of work (PoW) or proof of stake (PoS) that prevents a bad actor from making changes to a transaction without the consensus of a majority of the nodes on the network. 

Advantages of Blockchain Over Traditional Database and Applications

The advantages of blockchain compared to traditional databases differ based on the use cases. However, the following are some of the most common benefits of blockchain technology.

  • Security: Because the data is stored on the blockchain connected by many different computers/nodes instead of on a central server, the data won’t be lost or hacked.

  • Irreversible: A confirmed and stored transaction is protected by cryptography, and it cannot be changed or deleted without a consensus. 

  • Transparency: Being a shared database, those on the network can view the full details of the transactions like the source, date, time, and recipient of the transaction.

  • Cost-effective: Blockchain because it is a trusted peer-to-peer network does not need a central third party thus avoiding the related costs.

  • Fast operation: It normally takes 3-7 days to process a transaction, say sending money to a beneficiary, but with blockchain, this can be done almost instantly at a fraction of the cost.

  • Availability: Even if a computer is down or out of the network, other computers will keep the network working, unlike in the case of a central server where the entire connected network will be down if the server goes off.


A general notion is that blockchain technology is all about cryptocurrencies. This is not true as can be observed from its wide application.  

Real-World Use Cases of Blockchain 

Since the launch of Bitcoin in 2009, the blockchain has found its use in the creation of many other cryptocurrencies, and applications in smart contracts, non-fungible tokens (NFTs), and decentralized finance (DeFi) applications. Here are a few real-life areas that are currently using blockchain technology, though they are not an exhaustive list, the use cases keep growing. 

  • Cyber Security -  With online apps and transactions rising, there is an increasing threat of stealing the identities of people by cyber hackers, by breaking into the central server. In a blockchain, they have to hack the majority of computers/nodes on a blockchain network, which is practically impossible.

  • Banking and Payments - Blockchain can help make banking services available to those who do not have access to financial services, and payments, enable faster and cheaper transfers and conduct transactions more securely. 

  • Healthcare - A lot of privacy is involved in healthcare and blockchain allows encoding and storing medical records with a private key so that only certain individuals can access them and keeps them safe from unauthorized changes and tampering.

  • Property Records - In the traditional land and property recording systems of governments that involves physical documents, records, and entries in the central server, there are rooms for manipulation, tapering, loss of title rights, creation of fraudulent records, etc. 

  • Smart Contracts - Blockchain allows the creation of smart contracts under a set of computer-programmed conditions to automate quicker execution of contracts that allows instant visibility of the outcome to the participants, without the involvement of an intermediary.

  • Supply Chains - The supply chain adopts blockchain to track the origins of materials used in the product, the location and origin of the manufacturing plant and country, and the real-time visibility of the shipment status to the stakeholders. 

  • Voting - A blockchain-supported voting system can eliminate election fraud, boost voter turnout, make votes tamper-proof, bring transparency to the electoral process, reduce the manpower needed to conduct elections, eliminate fraudulence, and facilitate nearly instant results.


Bottom Line

Blockchain technology can improve the way businesses operate, but more importantly, it may also change the lives of millions of people by enabling inclusive banking. Furthermore, it can help governments eliminate or minimize corruption in governance affecting business, people, and the economy with the transparency blockchain brings to transactions and records. Businesses, particularly small to medium businesses should not miss the opportunity to reap the potential benefits of blockchain because it does not have the required team and infrastructure. This is where Task as a Service (TaaS) platforms can help you to get blockchain technology to enhance your operations, all at a low cost.

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