Predicting the future is now possible — within reason. Every company out there needs a way to identify trends in order to gauge what’s coming. This allows businesses to prevent problems and take advantage of opportunities. Predictive analytics, while complex to use, are the key. Analysts can assess current data to find patterns and form an idea of what will likely happen in the future.

So much can be learned from cryptocurrency and blockchain technology, and not just for financial companies. Other businesses, especially those that have had problems collecting or analyzing data, can leverage the predictive analytics suites that have resulted from blockchain-based companies. The type of advanced security that blockchain technology operates under is also something to be learned from and adopted.

Blockchain reach and transparency

Blockchain is the system that records cryptocurrency transactions, which take place on a peer-to-peer (P2P) network. A P2P network does not have a central server. Instead, computer systems are connected to one another online. The blockchain is essentially a ledger of all the cryptocurrency transactions that have ever occurred on that network. Every time another transaction occurs, the blockchain is updated.

There isn’t one master blockchain — there are several and they operate in different ways. The public blockchain is exactly that: public. Private blockchains require sign-in authentication and validation. Neither one is altogether risky, though private blockchains are safer due to that required validation. Either way, if one network in the blockchain fails, the ledger isn’t affected because the data is stored on multiple computers.

Bitcoin is what most people think about when they hear “cryptocurrency” or “blockchain.” Bitcoin has been around since 2009, with blockchain as its underlying system. Now, with other cryptocurrencies on the market, blockchain doesn’t refer solely to Bitcoin any longer; as different cryptocurrencies were created, blockchain technology was needed for them as well. Cryptocurrencies may be popular, but it’s blockchain technology that’s the real star.

Why the blockchain is so safe

Blockchain may be a new technology, but that doesn’t mean it’s behind when it comes to privacy and security. There are a number of reasons why the blockchain is a pillar of safety:

Information is not uploaded to a cloud server or stored in one location. Without a central point, there’s no lone target to attack. There’s also no middle man, which means the blockchain isn’t exposed to risk via software or a vendor vulnerabilities.

Blockchains use cryptographic signatures, which means data is turned into code, and that code is nearly impossible to hack.

When a cryptocurrency transaction occurs, information is added to the blockchain. This is called a “block,” which can be thought of as a page of the ledger. Once a block is added, it’s incredibly difficult to modify. To ensure the information being added is legitimate, proof-of-work is required, which means an equation has to be solved so that the block can be validated and added.

Hackers don’t generally have the power to hack blockchain. Since transactions have to be confirmed by several nodes on the network, hackers would have to hack numerous nodes simultaneously.

Predictive analytics and the blockchain

Predictive analytics is the process of using insights from collected data to forecast what will happen. There are major barriers for most companies, though. First, there has to be a large amount of historical data collected — many companies aren’t collecting enough data or haven’t done so for long enough. Second, even when enough data is collected, it takes a high-level analyst to make accurate predictions; many brands simply don’t have the in-house expertise required or the budget to hire a provider.

Predictive analytics are used with the blockchain in order to predict cryptocurrency price fluctuations. The reason why predictive analytics are so effective in terms of the blockchain is because data is collected from an enormous P2P network. This is there many other businesses that would benefit from predictive analytics fall short: They simply don’t have the breadth of data to extract reliable information for the sake of forecasting.

Predictive analytics can clue finance companies into market trends, including:

History of coin prices and trading volumes.

Which variables are affecting the price of a coin, i.e. past demand, new market regulations, etc.

Whether price movements will be short term or long term.

If highs will quickly shift to lows and vice versa or if highs will continue to climb or lows will continue to dip.

When, why, and how traders have made decisions in the past and if the same stimuli are occuring now or will occur in the future.

Blockchain-based companies, also known as fifth-party logistics providers, have been able to leverage data technology to create vast predictive analytics suites. This replaces the need for an in-house data expert because the suites are powerful enough to look through data sets and forecast accurately. Expert analysts are still valuable, though, particularly for choosing and combining the specific algorithms that will deliver results. For smaller businesses and startups without a big team or the budget to hire an analyst, predictive analytics suites with natural language processing (where the computer system can understand layman language) can be a game changer