Service Innovation on Blockchain Technology

Running Head: BLOCKCHAIN TECHNOLOGY 1
Service Innovation on Blockchain Technology
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BLOCKCHAIN TECHNOLOGY 2
Blockchain Technology
The blockchain is a distributed collection of data stored in computers that keeps
records and manages business deals. Instead of one single institution such as a bank, blockchain
uses a network that has computer codes to endorse business deals and keep the records (Agarwal
& Selen, 2011a). Since the approval of these business deals is distributed in nature, it is almost
imposible to interfere with the system and also the Cryptography helps to keep these deals safe.
The Blockchain Revolution in Financial Services
Blockchain Technology aims to improve the way things are done, transparency and
the security of the financial sector, make it more cost-effective and also coming up with more
improved innovation (Agarwal & Selen, 2011b). A lot of big financial institutions like major
banks in the world have already started exploring the potential of this technology. It is a
reorganized public ledger that has all the details of every business deal that Bitcoin has ever
completed.
Due to the improved innovation in the protocols of the technology, the ledger is now
more precise and safe. The technology became more popular when it became known that
blockchain can be used to keep the information about the digital assets transfer, can keep records
of property ownership, and drawing smart contracts that demonstrate the rights naming a few
applications (Agarwal & Selen, 2014). Due to the technology reorganizing and making some of
these processes automatic, operations in organizations are now done faster and cheaper.
ABCs of Blockchain
It was first established by Bitcoin the cryptocurrency. It is a distributed ledger
managed by a network of uninvolved people or participants. These participants also called

BLOCKCHAIN TECHNOLOGY 3
Bitcoin “miners” use computers with sophisticated algorithms and security protocols to handle
business deals, therefore, ensuring they are highly accurate and secure. The blockchain is
available to everyone, and it is also completely transparent, but the miners who process these
business deals first are the only ones who get compensated. As other miners process and confirm
different transactions, these transactions are grouped into groups known as blocks, these blocks
of sales combined make the blockchain. Blockchain technology transforms the transaction
process by diffusing the authority, being transparent and eliminating the need for intermediaries
that were previously necessary for the transaction process to be successful (Petrasic, &
Bornfreund, 2016).
Public VS Private Blockchains
Public blockchains are available to all. Transactions are confirmed publicly and kept
in the public domain. The methods of agreement and financial incentives are incorporated into
the system to make sure the system is of high integrity and to legitimize the business deals. One
of the advantages of public blockchains is funding, which is outside the government or any
private entity’s influence. Developments of the public blockchain are made by the agreement of
all the participants since it is available to everyone (Hacklin, Adamson, Marxt & Norell, 2015).
This easy access leads to greater participation and also the likelihood of the public blockchain
system to be used in many different applications is higher. Finally, they offer the possibility of
lowering the transaction fees.
Private Blockchains are formed and managed by a private entity. Only the authorized
parties access the security protocols. Transactions are confirmed privately, and it is possible to
change them, therefore enabling the operators to adjust mistakes. This component is not allowed