Blockchain Technology – The Next Biggest Trend in the Market. Last few years were marked as the year of cryptocurrencies. Amongst all the cryptocurrencies, Bitcoin was the most popular one because of its fluctuating prices. Last year, it reached anall-time high and proved to be the fortune for many. However, in a very short span of time, it started losing its value and created huge uncertainty in the market. Many people are still not clear on the concept of cryptocurrency and blockchain technology, but these currencies are soon going to change the way we see the financial world.
What are cryptocurrencies?
The first ever cryptocurrency was Bitcoin, released in the year 2008. Cryptocurrency is a digital or virtual value of money used for buying or selling anything all over the world. It serves as the medium of exchange. With the success of bitcoin, many companies came up with their own versions of cryptocurrencies also known as Altcoin or alternative coins. All the other versions of cryptocurrency used the same platform but with slightly different variations. But the common thing amongst all these cryptocurrencies is the blockchain technology. Blockchain and cryptocurrency go hand in hand, and over the years have become joinedto each other, because of the need of paramount security.
About blockchain technology
Blockchain is a platform or you can say a ledger provided to cryptocurrencies to aid them in transfer between different entities virtually without any authorization from any central authority. Transactions can happen directly without the need of approval from any government body. It is a secure platform, and it records all the transactions that happened between two accounts through virtual mode. The transactions happening between two networks are first validated by miners before getting stored on the blockchain. Miners basically are certain set of users available on blockchain network, they are authorized to validate the transactions. Once these miners validate these transaction through computation, there are certain blocks in the blockchain network where these transactions are then stored and locked with the help of hash.
Blockchain technology is going to be future of financial system to solve the major security issues. Investors have started turning to blockchain technology in order to safeguard their financial operations and investments. Blockchain technology offers various benefits like decentralization, transparency, Immutability, and Security, which we think are enough to prompt government of all the countries to make it part of their financial system:
Being decentralized assures its users that there is not going to be single point of network failure. There are so many miners in the system, that if anyone the mining node is down, others can work quite efficiently without failing the system. In local banks, we often face problems like not being able to transfer money due to public holidays or server issue but blockchain technology does not limit your transactions and allows users to use the network at any point of time. No validation or verification is required from any central authority and hence the transaction takes place in minimum time.
One can not find any financial system as transparent as blockchain technology is. The data of all the transactions happened using this network is publically available to download and verify. This system of open communication and authentication through verification messages helps in safeguarding the investors from any sort of malicious and fraudulent activities.
Immutability is a feature that bars user from making any modification in the transaction once the details have been entered in the block of blockchain system. To make any sort of modification it requires at least 51% of consensus from miners on the network. This helps in avoiding issues like tampering and doubling.
Security itself is the huge feature to make blockchain part of our financial system. There are two keys provided to users, one which he makes public and it works as his username or the address to reach him, and the other one needs to be private as it serves as the password to access your blockchain account. Blockchains usually use double SHA 256 in order to create hashes before locking the transactions in blocks, hash function cannot be decrypted and that is why it is really very difficult for classic computers that we are using today to breach the security of transactions.
Future of FinTech
Since the time cryptocurrencies have come into the picture, we are constantly hearing about Fintech. Looking at the recent rate of online frauds, it is evident that our financial system needs to be really strong and technologies like blockchain must be incorporated in our system.
If incorporated in system wisely, there is much more to do with blockchain technology apart from just providing security to the virtual money. Here are certain areas where blockchain technology can prove to be really very useful:
• Identification management: With the help of this blockchain technology, government can hold the data of each and every citizen including all their certificates. Apart from government, only users can access the data with the help of security key provided to them. It will help to eliminate the need of paper-based certificates. It will make the system more transparent and consumers will have full control over their personal data, they need not furnish unnecessary legal documents to prove who they are.
• Digital Voting: EVM’s still face many allegations like tampering, but with blockchain voting technology votes will be verified and will assure the honest and non-tampered voting. These votes will be legitimate because of the full proof identification management process.
• Stock market: Because of being centralized, it takes at least two to three days to make any settlement related to stocks and bonds. But with the introduction of trading through blockchain, settlements can be made instantly that too with cost-effective measures.
• Smart contracts: With the help of blockchain technology we can shift to smart contracts, eliminating the need forstandard paper-based legal contracts. They can be made with the help of ledgers and can easily be operated as one of the decentralized functions.
• Real estate: Real estate is one of those sectors which is prone to lot of fraudulent activities. Therefore technology like blockchain can help in bringing the transparency by providing accurate details regarding property titles, historic values, and previous transactions.
These are just some possible areas where the blockchain technology can be applied, but with proper planning and execution, this technology can do wonders to help countries make their systems more transparent, reliable and secure.