We all have heard about it. But do we actually familiarize with it? What are the advantages of this technology and how, when, where, is it used? Let’s get an insight into this technology.
What is blockchain?
Blockchain is an open platform where peer to peer transactions takes place under various open interrelated accounts. It is a digital ledger or we can say that it is a growing list of records known as ‘blocks’ in which transactions made in cryptocurrencies are recorded chronologically and publicly so that all can see it easily. They are linked via cryptography.
We can also refer to blockchain as blocks of a chain which are connected and protected using cryptography.
To get a basic knowledge of any technology we need to ponder on its past and explore its creation.
Blockchain was invented by a person using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger (a sort of principal book or computer file for recording and summation of economic transactions) of the cryptocurrency bitcoin.
The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need for a trusted authority or central server. The bitcoin design has inspired other applications, and blockchains which are readable by the public are widely used by cryptocurrencies.
In the last few years, the concept of blockchain is quite trending, especially in the banking sector. The Banking sector needs a safe, cheap and easy way of operating day to day banking services and blockchain is one such technology that can pave a safer way for the banks to carry out its transactions.
Blockchain has a wide frame of usage and can be used in various practical platforms like healthcare, insurance, etc.
Banking is one such sector which has explored this technology to a wide extent.
Blockchain in banking:
- The problem of transnational fraudwill be minimized across the globe. Considering transactions between nation is a big deal as frauds, terrorism and illegal activities hamper the situation and cause trouble during transactions between nations.
- The problem of black-money is widespread across the globe. Due to lack of information about sources of fund transfer, banks or governments often cannot take any corrective action against black-money transactions.
- Sometimes due to technical problems data of sometransactionsis lost.
- data of banks get tampered by hackers’ group. After that hacking, it is very hard to reassure that every data is correct 100%.
Blockchain proves to be a saviour in these cases:
- Transactional Fraud:
When blockchain technology is used in banking then each and every transaction can be seen by any person related to that group and also the direction of flow of money can also be depicted through this technology.
When blockchain technology is used in banking each transactional record is clear to the concerned parties and illegal transfer of money can be easily be checked.
- Data loss and hackers
When blockchain technology is used in banking, each data is circulated to everyone and if any data loss will be there then one can easily get it from other sources. If we talk about hacking, it’s impossible. Millions of computers are interrelated at the same time, so if any hacker should try to hack them, then they have to hack all the computer in one go.
Blockchain and cryptocurrencies go hand in hand in some cases.
What is cryptocurrency?
- It is basically a virtual or digital currency that uses cryptography for security. It is quite difficult to counterfeit cryptocurrency because of its strong security features that lie underneath.
- Many cryptocurrencies are a decentralized system based on BLOCKCHAIN.
- A defining feature of a cryptocurrency, and arguably its biggest allure, is its organic nature; it is not issued by any central authority, making it theoretically immune to any sort of government interference or manipulation.
Let us look at some examples of Crytocurrencies:
It is the first decentralized ledger currency. It is the cryptocurrency with the most famous, popular, notable and highest market capitalization. It was released in 2009 founded by Santoshi Nakamoto.
Bitcoin is denoted by (BTC) and operates on C++ platform.
It is the first cryptocurrency to use (script) as a hashing algorithm. It is denoted by (LTC) and uses the C++ platform. It was founded by Charlie Lee. Litecoin is based on an open source global payment network that is not controlled by any central authority Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, a global payment network that is fully decentralized without any central authorities.
Introduced in 2015, Ethereum is a decentralized software platform that enables art contracts and Distributed Applications to be built and run without any downtime, fraud, control or interference from a third party. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response.
Let’s discuss certain applications of blockchain:
- Asset Management: Trade Processing and Settlement
Traditional trade processes within asset management (where parties trade and manage assets) can be expensive and risky, particularly when it comes to cross-border transactions. Each party in the process, such as a broker, or the settlement manager, keeps their own records which create significant inefficiencies and room for error. The blockchain ledger reduces error by encrypting the records. At the same time, the ledger simplifies the process, while cancelling the need for intermediaries.
- Payments: Cross-Border Payments
The global payments sector is error-prone, costly, and open to money laundering. It takes days if not longer for money to cross the world. The blockchain is already providing solutions with remittance companies such as Abra, Align Commerce, and Bitspark that offer end-to-end blockchain powered remittance services. In 2004, Santander became one of the first banks to merge blockchain to a payment app, enabling customers to make international payments 24 hours a day, while clearing the next day.
- Smart Appliances
A smart appliance is a device that connects to the internet and gives you more information and control than before. For instance, a code connected to your appliance can be linked to the internet and alert you when your cookies are ready or if your laundry has stopped. These alerts keep your appliances in good condition, they save you money regarding energy efficiency and help you control your devices when away from home, among other benefits. Encrypting these appliances on the blockchain protects your ownership and enables transferability.
- Blockchain Healthcare
Personal health records could be encoded and stored on the blockchain with a private key which would grant access only to specific individuals. The same strategy could be used to ensure that research is conducted via HIPAA laws(in a secure and confidential way). Receipts of surgeries could be stored on a blockchain and automatically sent to insurance providers as proof-of-delivery. The ledger, too, could be used for general health care management, such as supervising drugs, regulation compliance, testing results, and managing healthcare supplies.
- Public value/ community
The blockchain can facilitate self-organization by providing a self-management platform for companies, NGOs, foundations, government agencies, academics, and individual citizens. Parties can interact and exchange information on a global and transparent scale – think of Google Cloud, but larger and less risky.
Thus, Blockchain is one such technology that has a wide approach and can be very effective in the near future. Blockchain can be used in almost all major sectors of society effectively and efficiently and thus contribute to the advancement of science and technology.