The predefined business logic in a blockchain is called the “consensus algorithm.” This algorithm aims to achieve the highest possible level of agreement among nodes on the chain.
The most successful consensus algorithms work by consistently and repeatedly asking nodes on the chain for their status and then averaging these responses instead of just taking one node’s word for it.
The average result will be much more accurate, especially when many adverse conditions, such as noise or collisions, occur. Hence, the resulting consensus should be quite robust.
Smart contracts are this business logic layer that enables blockchain to support business process fulfillment. Blockchain technology creates a viable decentralized record of transactions in the distributed ledger, which allows substituting of a single master database.
The distributed ledger enables the creation of digital contracts that are self-executing and self-enforcing. In other words, a smart contract is a computer protocol planned to digitally facilitate, approve, or enforce the negotiation or performance of a contract.
As an organized system of rules that can be programmed to automatically regulate contractual obligations and exchange information in the form of digitally signed transactions.
What is a Blockchain?
A blockchain is a distributed database shared by all the nodes on a network. The nodes are usually computers or other devices connected to a network. The blockchain copies its entire history, which means that every transaction occurring on top of it will be recorded forever in the chain.
The blockchain is an incorruptible digital ledger capable of recording transactions securely and cannot be edited by any single entity without the cooperation of all nodes on the chain. It represents a shared, continually updated, and decentralized historical record of all transactions (both incoming and outgoing), which is secured by cryptography.
Benefits of Blockchain
Improved security for data, especially medical records: This would increase the security of information and personal data in health care. For example, it may help prevent medical data from being hacked by others.
In this case, blockchain will contribute to the well-being of individuals by improving their privacy and reducing costs to a great degree. Another example is travel records. Blockchain can also enhance the security of the movement of goods between countries, reduce industrial fraud, and ultimately cut consumer prices.
Reduced reconciliation workload: Blockchain technology does not trust a single central authority. It means that information cannot be altered, translating to a more efficient and effective reconciliation system.
Improved communication: It delivers secure and reliable access to other people without the risk of hackers or intermediaries (such as email spammers) intercepting or modifying data.
Opportunity to save money: Collection and delivery of goods are much more efficient and cheaper through blockchain technology. Also, tracking a shipment will help prevent fraud and reduce theft, which will translate to huge savings for consumers and businesses.
The technology has numerous uses in other industries, too. For example, the insurance industry could use blockchains for smart contracts that trigger automatic payments when certain events occur. This can make insurance claims much faster and easier to process by automating certain functions automatically.
Increased Efficiencies: Blockchain technology helps make the exchange of goods and services more efficient, which translates to higher-quality items being created at a lower cost, which is good for consumers.
Decentralized ecosystems: Blockchains are decentralized networks that connect the computers on a network without needing a central authority.
The decentralized nature of the blockchain is one of its most appealing features, which means that networks can be operated without a central authority. This creates greater opportunities to create more secure, open systems in which all transactions are recorded on a blockchain, available to all network members.
Freedom: While blockchains may not be perfect, they provide the power to create new privacy. They have distributed ledgers that allow the transfer of assets without intermediaries such as banks or auditors.
Increased Trust: Blockchain technology also helps to create greater trust by offering transparency, which means that users can see where their assets are going and how they are being used. In addition to increased transparency, the blockchain offers true decentralization, which means that a transaction made on the blockchain cannot be altered or reversed once it has been completed.
New categories of apps: The technical characteristics of blockchains (including their decentralized nature) make them especially suitable for recording transactions between multiple parties.
As a result, they are well-suited to support a new generation of peer-to-peer (P2P) business applications. These applications help remove intermediaries and empower users to engage in direct transactions without intermediaries.
Lower cost of financial services: By using blockchain technology, the cost of establishing a business can be reduced, creating new opportunities for individuals and SMEs to start a business without having to deal with banks or third parties.
The blockchain has the potential to revolutionize virtually every aspect of our economy, including insurance. However, it will take time for the technology to develop and grow fully. However, startups are already at work trying to harness the power of blockchain by creating several products in this space.
Some well-known companies already involved in developing blockchain platforms include IBM and Microsoft. Whether you are a big company or an individual, you should keep your eyes on the technology, and this is why we have come up with this list of startups working in the insurance space.
Below, we have listed some of the most interesting startups working in the insurance space. They have either launched their products or will launch them soon, so it is worth keeping a close eye on what they do. In addition, we have listed some other products worth looking at and explained why they are worth paying attention to.