Todd Sumamno
What Is Blockchain Technology?
Blockchain technology is a virtual structure responsible for storing and managing online transactional records. This structure is also known as a “block.” Moreover, since multiple blocks form a single chain, this structure is called “Blockchain.”
This structure stores and manages transactional records in public databases. These databases are multiple computers in a network connected through peer-to-peer nodes. Therefore, this form of data storage is also called a “digital ledger.”
With the debut of Bitcoin in 2009, Blockchain went from theory to practice, proving that this digitized distributed ledger technology works. Since then, businesses have been experimenting with using Blockchain to their advantage.
Blockchain is used by big-name enterprises, governmental organizations, and charitable organizations to streamline old procedures and create new business models.
The usefulness of Blockchain originates from its capacity to transfer data across entities quickly and securely, without requiring any institution to bear responsibility for information security or transaction facilitation.
Why Is Blockchain Technology Safe and Secure?
There are thousands of transactions in a single digital ledger. Moreover, these transactions rely on the owner’s unique digital signature (unique identifier). The purpose behind this unique digital signature is to authorize the transaction and safeguard it from tampering. This is why Blockchain technology is also highly secure, as hackers would have to manipulate thousands of online entries to tamper with the data.
What Are the Benefits of Blockchain Technology?
Blockchain technology offers a new way of information exchange. The information is distributed but never copied. Therefore, it provides a new type of internet. The Blockchain is a simple way of passing information. It gives information from A to B in a safe manner. Moreover, this process is automated.
In addition to this, one party creates a block of information. This block is useful for information exchange. Numbers protect it. So, no one can copy it. Millions of computers verify it. These computers are part of a network. The verified block becomes part of a chain. Then, a network of computers stores this Blockchain over the internet. Therefore, it makes a unique record. Moreover, this chain creates a unique history.
It is not easy to falsify this. It would mean forging the entire chain in millions of computers. So, blockchain technology offers a lot of security. Falsifying this chain is impossible. Bitcoin uses this technology for transactions.
Where trust is either non-existent or untested, Blockchain generates trust amongst multiple entities. Therefore, many businesses are willing to participate in trades or information exchange that they may not have performed otherwise or that would have necessitated the use of a mediator.
Among the most frequently mentioned advantages of Blockchain is facilitating trust. Early blockchain use cases demonstrated their worth by facilitating transactions between companies that did not have direct contacts but needed to exchange information or make payments. Digital currencies, in general, are classic instances of how Blockchain allows individuals who don’t know one other to trust one another.
Blockchain Records Are Decentralized
Blockchain is decentralized. So, a single entity doesn’t own it. All data is secure with cryptography. So, it is safe. No one can tamper with it. Therefore, it offers maximum security. A single entity doesn’t own it. A network of computers runs this blockchain technology. So, this offers maximum protection.
When there is no central player to facilitate confidence, Blockchain reveals its worth. As a result, blockchain technology allows data exchange across a corporate ecosystem where no single party has sole control.
Suppliers, shipping firms, and producers all want or require information from others in the supply chain. However, no one entity is responsible for facilitating this data exchange. The decentralized nature of Blockchain overcomes this problem.
Blockchain Offers Transparent Transactions
All connected computers receive the new block. So, all transactions are transparent. Every user has a record. Therefore, all transactions are transparent.
Blockchain Records Are Immutable
No one can tamper with a chain or a transaction. Therefore, blockchain technology offers immutability. So, all your money and transactions are safe. This can provide hack-proof ways for financial transactions.
What Are the Cons of Blockchain Technology?
Even though Blockchain technology brings plenty of amazing benefits to the table, multiple cons are associated with using this form of encryption and technology. Let’s explore these in detail.
Blockchain Demands Powerful Machines
Blockchain technology requires powerful machines for the mining processes. Therefore, this requirement drives up the maintenance and initial setup costs. This is why only big corporations are currently involved in this process.
It Offers Low Transactions
Since Blockchain technology is in its early years of development, the number of transactions per second is relatively lower than other similar technologies. An experienced blockchain developer, such as Vitalik Buterin (creator of Ethereum) is essential when it comes to increasing the transaction speed.
It Is Widely Used for Illicit Purposes
Since Blockchain technology offers maximum anonymity and transparency for the users, people have been known to use this technology for illicit and illegal purposes. It is widely used to pay clients and organizations on the dark web for illegal purposes. The law enforcement authorities cannot track blockchain technology or bitcoins back to the original owner. This is why Blockchain technology has been widely used for illegal purposes.
The Government Regulations Are Getting Aggressive
If you constantly stay in touch with this field, you must know that governments across the globe are enforcing strict regulations on Bitcoins and Blockchain technology. It is almost impossible to end something as huge as Bitcoin and cryptocurrencies. However, governments can easily make it illegal to own cryptocurrencies or join such networks. In addition to this, governments are actively looking to implement stringent tax policies on people who own cryptocurrencies.
What Is the Bottom Line Here?
Blockchain technology is the future of cryptocurrencies and other sectors, such as healthcare, education, and banking. However, this technology is relatively younger than other options in the market. It is hard to determine how people will use it in the future. Nevertheless, big corporations, such as PayPal and Amazon, are constantly trying to implement and develop new technologies using Blockchain. We will have to wait for now and see how it turns out.
This guide about blockchain technology for beginner’s merely serves as a starting point. You can discover more by delving deeper into the world of modern cryptocurrencies, how they work, and how you can use blockchain technology to your benefit. Good Luck!
Brittany
