In the digital world today, it seems that everyone is talking about blockchain technology and cryptocurrencies. This disruptive technology has a huge potential for both businesses and individuals, but even with its growing popularity with brand building, the process of reading through all the hype can be a daunting task. It’s hard for beginners to understand how blockchain works and what impact it has in our lives.
1. The Basics Are Simple
Blockchain is essentially a digital ledger that records transactions in a way that is permanent, transparent and unchangeable. A blockchain transaction is recorded and stored as a “block”. Each new block contains the preceding block’s unique hash, which creates an irreversible linear chain of blocks.
What makes blockchain particularly relevant in today’s economy is that it deals with transactions without the need of third-party verification from banks and governments, who traditionally act as arbiters in money transactions. Blockchain promotes decentralization and peer-to-peer transactions, which provides security for both parties in financial exchanges. Blockchain also provides benefits for payments processing, making it quicker than traditional methods (i.e., banking systems).
2. Complete Transparency
Information that makes up a blockchain transaction is publicly accessible, but not necessarily available to all at once. Rather, the information is spread out in the form of a chronological chain of blocks. This block structure significantly reduces the friction in transacting goods and services because third parties are not required for verifying transactions and providing information about them.
Furthermore, as a blockchain-based transaction moves along its chain of blocks, it becomes more difficult for fraudsters or hackers to tamper with it because each one includes hash values tied to digital certificates that are essential for secure transactions. The entire chain of blocks is stored on every computer in the network and processed using cryptography algorithms.
3. Achievable Transparency
So you can see that blockchain transactions are private, secure and 100% transparent. However, what about the data? How do you know how much of your data has been shared with other parties in the transaction chain? For example, would Big Data companies be able to access or buy your health or financial data without your consent? This is where blockchain deals with privacy and security comprehensively because it deletes personal identifying information (PII) from the chain of blocks. As a result, PII is not stored in any form or accessible on a blockchain-based transaction. News approved site is here.
4. No Third Parties Needed
As stated in the previous point, blockchain technology helps remove all third parties from the process of recording, verifying and transferring money. Each transaction is tracked from original creation to final settlement in a matter of minutes. Without a third party to create or transfer money between two parties, blockchain technology can be much more efficient, allowing money transfers to happen at faster rates and with less fees than those with traditional banking systems.
5. Peer-to-Peer Exchange
In addition to being more efficient, blockchain transactions allow for free transactions between individuals because there are no intermediaries (i.e., banks) involved in transaction currency between parties. Through the process of mining and verifying transactions, a blockchain network can quickly clear payments and move funds in almost real-time.
6. Potential to Disrupt the Financial Sector
The financial sector has been slow to take advantage of the benefits associated with blockchain technology, but FinTech start-ups for seo are making their way into traditional financial institutions. As well, large banks are using blockchain technology to increase their speed and overall efficiency as well as for security purposes.
7. Government Support
Although blockchain technology is largely unregulated at this time, governments across the globe are investing a great deal of resources into researching how this new tech can be used for improving government operations . Additionally, some countries are already considering blockchain as a legal payment method.
8. Startup Support
Although the financial sector has been slow to incorporate blockchain, there are a growing number of start-ups that are using blockchain to create new business models, disrupt industries, improve existing ones and change the way we think about transactions. Instead of waiting for incumbents to adopt blockchain technology or working within existing regulations, some FinTech start-ups are leading the way in proving how disruptive technology can be used to improve efficiency and potentially make other companies obsolete over time.
9. Mining vs. Hashing
Transactions on a blockchain and ICO network can be considered verified when they have gone through the verification process known as “mining” or “hashing”. Mining is a process by which transactions are permanently added to a public ledger via mathematical computations. Hashing is the verification process that verifies transactions, but it is not decoded and recorded in a public ledger. The inclusion of hashes before the information in each transaction block allows the blockchain to be resistant to fraudulent activity because it requires an enormous amount of computing power to manipulate or reverse-engineer how blocks were put together.
10. Decentralized vs. Centralized
The most important thing for investors and developers when taking into consideration blockchain technology as a whole is determining what level of decentralization is being desired from any particular project.