Presently, technology has created a means for people from all over the world to communicate without fear of trust despite their distance. Communication can be carried out via voice, video calls, emails, pictures, and instant messages, but the problem is that whenever money is involved, a reliable third party is required that can be trusted to enable these monetary transactions. However, Blockchain technology has aided the way we communicate radically. It uses math and cryptography to provide an open, decentralized database of every transaction involving value, money goods, property, works or even votes, creating a top score whose authenticity can be verified by the entire community.
The global economy of the future is changing to the platform of distributed property and trust, where anyone connected to the internet can get involved in blockchain based transactions and third-party trust organizations may no longer be necessary. What is blockchain and why is it important? Will blockchain be recognized by the government, financial and legal institutions ? Find out more from this article.
What is Blockchain?
A lot of people see blockchain as the technology that powers bitcoin which of course was its original purpose. However, blockchain is capable of so much more. Blockchain covers a wide scope, and it is simply a means for the whole collection of distributed ledger technologies that is in automated form, and it is capable of recording and tracking anything valuable, from land titles to financial transactions or even medical records.
Types of Blockchain
There are different types of blockchain which can be implemented in many different ways. The different types of blockchains are:
- Private blockchains: This type of blockchain is accessible only by a particular group of approved users such as companies, banks or government agencies.
- Public blockchains: This type of blockchain, on the other hand, is entirely exposed to the public to view and access.
- Consortium blockchains: This is also known as a hybrid public-private blockchains which are semi-decentralized because it has the features of both the private and public blockchains at the same time.
Reasons why blockchain technology is important for business in the world today
Even though we already have processes in place to track data, blockchain plays a very important role in the business world today. What is so different about blockchain? There are three reasons why blockchain technology seems to change the way we relate to each other which includes:
- The way it tracks and stores data: Blockchain stress information in batches, called blocks that are linked together in a chronological order to form a continuous line which is metaphorical, a chain of blocks. If you create an alteration to the information documented in a specific block, you do not rewrite it. As an alternative, the change is kept in a new block indicating that X changed to Y at a specific date and time. This sounds familiar because blockchain is based on the centuries-old method of the general financial ledger. It’s a non-destructive way to track data changes over time. Blockchain was designed to be decentralized and distributed across a large network of computers.
- It creates trust in the data: Before a block can be added to the chain, a few things will have to happen. Primarily, a cryptographic problem needs to be resolved, As a result of making the block. The computer that solves the puzzle shares the solution to all of the other computers on the network; this is called proof-of-work. The system will at that moment confirm this proof-of-work, and if it is accurate, the block will be totaled to the chain. The arrangement of this complicated math puzzles and proof by several computers guarantees that we can have confidence in every single block on the chain. For the fact that the network does the trust building for us, we now have the opportunity to interact directly with our data in real-time.
- No more intermediaries: Presently, when doing business with one another, we do not show the other person our financial or business records. Instead, we rely on trusted intermediaries such as a bank or lawyer, to view our records and keep that information private. These mediators build up trust amongst the interest group and can verify. This approach prevents exposure and risk but also adds another step to the exchange, which means more time and money spent. If one’s business information was stored in a blockchain, the middleman who would ordinarily confirm information could be cut out. All blocks added to the chain have been verified to be true and cannot be tampered with, so a person can show another person such information secured on the blockchain. It will enable a person to save considerable time and money by cutting out the middleman. This kind of reliable peer-to-peer collaboration with our data can transform the mode we gain access to, verify and deal with one another.
There is no doubt that blockchain is important to the global market. The working progress of blockchain is evident from its three major importances. As blockchain is growing its uses are increasing. It’s expected that soon it would be used as a means for the collection taxes, making an easy transfer of money to countries with limited financial institutions and putting a stop to financial fraud as every transaction will be recorded on a proper and distributed ledger which will be accessible by anyone who has an internet connection. Blockchain will become a decentralized global source of trust, but most people are not willing to recognize its importance. If the importance of blockchain is not recognized by the government or financial institutions, they will face the challenges on price, volume and in some cases their survival. Therefore, these institutions do not face any of these challenges they should fully recognize how important blockchain is to the global market.