What Is Blockchain?
Blockchain technology is a term that is mainly associated with Bitcoin and other Cryptocurrencies. In fact, it is a critical element of virtual currencies and without it, the digital assets would not exist. If you are new or just planning to get into the Cryptosphere, here’s an important guide about blockchain before you start.
Blockchain Technology Definition
According to Don and Alex Tapscott, authors of Blockchain Revolution (2016), blockchain technology is an incorruptible digital ledger of economic transactions, programmed to record everything of value including financial transactions.
History Of Blockchain
Blockchain is associated with Satoshi Nakamoto, an unknown person or group of people who created the first Cryptocurrency, Bitcoin, over a decade ago. The technology was quickly adopted in the development of other altcoins a few years later.
The increasing popularity of Cryptocurrencies has played a major role in spreading the gospel of blockchain. The technology could be said to have created another type of Internet, as it allows the distribution of digital information without copying it. Although the technology was originally developed for Cryptocurrencies, other potential uses continue to be developed, thanks to the efforts of the tech community.
How Blockchain Works
Blockchain allows the duplication of data many times across a network of computers. This network is designed in such a way that it regularly updates this data. Therefore, the data held by blockchain exists as shared and is continually reconciled.
Blockchain has given rise to smart contracts which are lines of codes stored on the network that are automatically executed when certain predetermined conditions are met. In businesses, smart contracts are used in some types of agreements giving all the participants certainties without the intervention of intermediaries.
Advantages And Disadvantages Of A Blockchain
• One major benefit of blockchain is that it is decentralized; information isn’t stored in any single location. Consequently, such a database cannot be hacked. The information is also accessible to those with Internet connection making the entire system public and verifiable.
• Blockchain has reduced costs of conducting business as it has eliminated the need for intermediaries to make guarantees to build trust. The data on blockchain is enough to establish trust.
• Blockchain allows for the use of a single digital ledger for record keeping. This is unlike the traditional, paper-heavy processes that are both expensive and time-consuming. Blockchain has therefore boosted efficiency and speed.
• The main disadvantage of blockchain is that its programmability feature makes products that ran on it as good as their developer.
Blockchain Technology In The Financial Sector
The banking industry is one of the first movers as far as experimenting with blockchain is concerned. Bitcoin and most of the other Cryptocurrencies have proven that blockchain can be used to reduce transaction time and costs. Furthermore, the technology could also help in making financial transactions more efficient.
DigiByte is an example of how blockchain could be used in cross-border currency transactions and payments. Under the current banking system, moving money from one currency to another to other countries is not only expensive but also time-consuming. Large businesses and individuals alike spend a significant proportion of their money on paying hefty transfer fees when sending money aboard. However, DigiByte is making this process cheap and almost instantaneous, thanks to its DGB token.
While blockchain is attracting attention in different industries, it’s future is still unclear with real world adoption and application not yet reaching the masses. Whether its disruptive force matches that of the Internet remains to be seen.