Blockchain Innovation Is Driving Cryptocurrency Adoption

Blockchain is the decentralized technology that stores information in the form of blocks of data that are grouped, in turn, in a chain of blocks. For its part, cryptocurrencies, common for betting on NFL and UFC picks, are one of the most recognized ways to implement a blockchain network.

Cryptocurrencies are changing the financial paradigm, but it wouldn’t be possible if it weren’t for blockchain. Technology is not only rewriting consumerism, though. It’s also creating a new way to do business, from signing contracts to confirming ownership.

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Blockchain Basics

The main characteristics of a blockchain network are that it is a distributed system that depends on the different nodes that make up the network. Said network tries to put the different nodes in consensus to verify the veracity of the data and create a block of data.

The more nodes that make up the network, the greater the network’s security since only 51% of the nodes need to accept the data for the block to be generated and added to the final chain. In a large network, it would be almost impossible for attackers to account for 51% of the system.

Another characteristic inherent to the network is the immutability of the data. Once the block has been added to the chain, that data can no longer be modified or deleted. All this allows the creation of traceability of the data and, therefore, increases the transparency of the system.

Public Blockchain

This type of network allows access to any person or node to be part of it, and its operation is completely transparent and open. There is no central controlling entity, so its economic maintenance of the integrated system.

There are also high-security measures such as Byzantine fault tolerance, consensus protocols and 51% attacks, DDoS protection, and control of double-spending. An example of this type of network is the BitCoin or Ethereum network, among others.

Private Blockchain

Access to it is restricted to elements authorized by a central entity that controls the network. Access to information is private and economic maintenance depends on the creative company itself. Security is similar to public networks but depends on the exchange.

The most striking example of this type of blockchain is Hyperledger and Ripple.

Hybrid Blockchain

This type of blockchain is a mixture of the two types of previous networks. A central or controlling entity authorizes the nodes or elements that are part of it, but the information is open.

Blockchain Advantages

The main advantage of these networks is, as previously mentioned, the immutability of the information, the distributed custody of the data in all the nodes, the decentralization, the resistance and resilience of the network at the exit of the nodes, the trust that is transmitted and the low cost it entails for users.

Surprisingly, the immutability of the information can also become a disadvantage due to the impossibility of modifying the data. It’s imperative to get it right the first time – there’s no way to delete data once it is on the blockchain.

Blockchain In Finance

The financial sector has shown great interest in exploring the world of blockchain, not only because of the eruption of cryptocurrencies but also because of the advantages of the possibility of keeping a system of records (including accounting ones) without the intervention of third parties.

In fact, this sector represents more than 60% of the global blockchain market. This is largely explained by the enormous digital transformation of the industry, always innovating to increase the security of operations and improve the experience of customers.

Regarding specific uses of blockchain in the financial sector, some examples are:

Initial Coin Offerings (ICOs) is a form of financing in which companies offer virtual tokens instead of shares.
Smart contracts (smart contracts). Programs that allow two parties to enter into a contract without the mediation of third parties.
International payments. Thanks to the Ripple (XRP) cryptocurrency, it is possible to make payments between different countries, avoiding transactions having to go through an intermediary.

Both blockchain and credit insurance are key tools for companies to reduce risks and streamline their operations.