The impact of blockchain technology is already changing the way we trade and perform our daily transactions and experts believe that it won’t take long for it to change our lives in the forthcoming years. Learn more about how blockchain is slowing becoming part and parcel of our life.
What Is the Blockchain Technology?
A traditional ledger book has been used for years to make and record transactions, contracts, agreements and other important aspects of trade. Invented by a group of people under the pseudonym Satoshi Nakamoto, the blockchain technology has revolutionized the way that these transactions are now being recorded, making things simpler, quicker and easier for the ones using it. The blockchain technology was initially created for Bitcoin (a tech community that emerged in 2008 to put the seller at the forefront, cancel interest fees and create a decentralized system where each one could control his/her funds and transactions).
A blockchain is a digital database that offers a secure way of recording transactions using a special software. Being more flexible than a traditional ledger book, this database can be shared across many users (hundreds and thousands of people) through a network of computers.
How Does the Blockchain Work?
As more and more transactions and agreements take place, they are compiled in this digital ledger as “blocks”. Each block is broadcast to a peer-to-peer computer network of users. Therefore, all users connected by this network is aware of all current transactions and data saved, making cyber hacks, double-spending and other forms of stealing almost impossible.
According to Sunny Ray, the co-founder and president of India’s bitcoin blockchain company, “blockchain enables two entities that do not know each other to agree that something is true without the need of a third party. As opposed to writing entries into a single sheet of paper, a blockchain is a distributed database that takes a number of inputs and places them into a block. Each block is then ‘chained’ to the next block using a cryptographic signature. This allows blockchains to be used as a ledger which is accessible by anyone with permission to do so.”
The blockchain technology is a reliable service that has gained the trust of many of its users because it does not need the help of third parties such as banks and it is safe.
The Growing Influence of Blockchain Technology
Among the main ways in which one can already observe the influence of blockchain technology is through the use of social media networks, online payments and remittances. Today, most people, companies and banks are aware of the importance that blockchain holds and have started to implement it in their business.
Apart from the financial sector, the blockchain technology is also being used in several other areas, including government land records in Honduras. The growing impact of the blockchain technology can also be seen in the recent announcement that the Australian Securities Exchange (ASX) has made regarding moving Australia’s equities clearing and settlement systems on to blockchain.
Blockchain Is Becoming Increasingly Important for Banks
Major banks are seizing this opportunity to experiment with blockchain as it provides them with a means to transfer money, keep records and perform other back-end functions easily. As an electronic ledger that is decentralized, it offers all the participants involved in the transactions with the ability to access the same information.
In addition, banks can now track all previous contracts and agreements that have been documented without altering any important data. Many IT service providers are now investing much of their efforts and research around using the blockchain mechanism for banks.
Blockchain Is Safe, Durable and Reliable
TEDx speaker and author Ian Khan claims that the blockchain technology works like the internet and has a “built-in robustness”. It can store blocks of information, has no single point of failure and can be controlled by any single entity. He further adds that “as revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
The transparency that blockchain offers makes all embedded data public and difficult to corrupt as it would require a “huge amount of computing power to override the entire network”.
Does Blockchain Hold a Bleak Future?
Although there are already many users of blockchain, there is still a group of people who think that the blockchain experiment will fail in the future. Nevertheless, the Livecoin team provides a statement that will remain true even if someday the blockchain fails. According to them, “blockchain will surely have brought more transparency, freedom and independence to all people and businesses by 2027”. Blockchain has helped many of its users in understanding how a transparent and independent digital ledger system can be more useful in our contemporary world where technology and trade is making huge progress.
However, emerging facts and estimates from the World Bank suggests that in 2015, over $430 billion US in money transfers were sent and that there is more than ever an increasing demand for blockchain developers.
Will the Blockchain Technology Change Our Lives?
For Stephan Tual, the founder and CCO of Slock IT, if blockchain is a success by 2027, this means that we will have access to “a larger array of services” and “to decentralised platforms where these services are rendered peer to peer, without intermediaries, and at considerable ‘discounted’ cost”. For him, the existence of blockchain doesn’t mean that we have to replace the old system but rather, it is a convenient alternative and choice for users now.