A Beginner-Friendly Guide to the Basics of Blockchain

Bitcoin and blockchain are often confused, but they're quite different. Blockchain goes beyond finance — cryptocurrency and cross-border transfers — with trials underway across many fields as a technology for enabling new businesses. This article explains blockchain simply.

1. What Is Blockchain

First, how blockchain works.

1.1. How It Works

Blockchain is a technology that uses cryptographic techniques to link transaction records together like a single chain, in order to maintain an accurate transaction history.

It was devised for direct transactions between parties, without needing a trusted third-party intermediary like a financial institution. It relies on distributed ledger technology: all participants share a ledger, verify transactions, and update it together.

1.2. The Evolution of Blockchain

Blockchain was born with the advent of Bitcoin, and has evolved through the following stages to reach where it is today.

1.2.1. Blockchain 1.0

Blockchain emerged in October 2008 to operate and manage Bitcoin transactions. Bitcoin spread across borders as a means for capital flight. However, the Blockchain 1.0 mechanism never took hold, seen instead as a “suspicious system” with a negative image. Blockchain 2.0

Blockchain drew attention as a technology capable of revolutionizing financial infrastructure, and in 2015 leading global financial institutions began researching it. This led to “smart contracts” — a mechanism for executing contracts on-chain — plus efforts to build decentralized apps and DAOs.

1.2.2. Blockchain 3.0

In 2017, Japan's Financial Services Agency established the “FinTech Proof-of-Concept Hub.” Financial institutions have joined and accelerated study of blockchain systems for shared customer identity verification. Adoption now spans manufacturing, distribution, government, and beyond finance, making blockchain a technology representative of fintech.

1.3. Characteristics

Blockchain is a distributed ledger (a technology in which all participants share a ledger and update it according to agreed consensus rules). Because of this, it has the following advantages and disadvantages.

2. Fields Where Blockchain Is Being Adopted

According to Global Information's research, blockchain development is projected to expand rapidly at a CAGR of 82.4%, with adoption beginning across many fields, starting with finance.

2.1. Finance

New blockchain-based payment services are being developed. For example, Mitsubishi UFJ Financial Group and Akamai are building a blockchain payment network for the IoT era, supporting “time-based billing,” “micropayments,” and the “sharing economy.”

2.2. Food

Initiatives to ensure food and raw-material safety using blockchain are gaining momentum, with adoption beginning in food supply chains.

Since October 2018, “IBM Food Trust” has offered a food supply chain tracking service, letting producers, processors, distributors, and retailers share supply chain data. This guarantees freshness based on production/shipping dates and enables precise, easy tracking.

2.3. Automotive

Automakers worldwide are watching blockchain, and consortiums for applying it are starting to form.

For example, Toyota Research Institute is working with MIT Media Lab to explore applying blockchain to autonomous vehicles. Highly safe autonomous driving requires large amounts of driving data.

This data must be shared among owners, fleet managers, and automakers — and blockchain is being adopted to make that possible.

2.4. Healthcare

At HIMSS, held in 2017, blockchain use in healthcare drew attention, leading to a system that prevents pharmaceutical counterfeiting — potentially saving lives lost to fake medicine. By having drugmakers, warehouses, distributors, pharmacies, and hospitals share information, the entire path a drug takes to reach a patient can be tracked.

3. For Blockchain Development, Choose “Miichisoft”

If you'd like to adopt blockchain development, leave it to Miichisoft, a high-quality offshore development provider. Here are the benefits of requesting development from us.

3.1. Recognized for High Technical Capability, Winner of the Sao Khue Award

In April 2021, Miichisoft received the honorary award for the company that contributed most to IT industry development at the “Sao Khue Award,” hosted by the Vietnam Software and IT Services Association (VINASA) — proof of our recognized technical capability in IT services and outsourcing.

The Vietnamese government is driving IT development, and per Vietnam's Ministry of Information and Communications, the country's information and communications industry earned 12.23 trillion yen in total revenue in 2019. Our Sao Khue Award as top contributor in this growing industry reflects our high technical capability.

3.2. Bridge Engineers with a Deep Understanding of Japanese Culture on Staff

Miichisoft is a software development company founded by engineers who share the aspiration to “help people worldwide through software development.” Our bridge engineers deeply understand Japanese culture and support Japan's IT industry — facing talent shortages and rising labor costs — through offshore development. Because they understand Japan well, you can make requests without worrying about communication issues.

3.3. Able to Handle Everything from Small- to Large-Scale Projects

Since its founding in October 2017, Miichisoft has worked on system development across many fields, growing steadily — from 4 employees at founding, to 35 by January 2019, 60 by November 2019, and now over 100. This lets us flexibly handle everything from small- to large-scale system development.

4. Summary

Blockchain was devised for direct transactions between parties without a trusted third-party intermediary. Applying it where its strengths — data transparency and tamper prevention — matter most can deliver major benefits, and it's likely to draw even more attention going forward.

Miichisoft is an offshore development company working on blockchain, with a wealth of experience recognized by the Vietnam Software and IT Services Association in 2021. If you're considering blockchain development, feel free to reach out.