Unless you have been parked in a dark cave on a mountain top for a few years, you would not have failed to encounter the terms, blockchain, or cryptocurrency in finance and technology. The reason why blockchain technology is being talked about more in recent years despite having been around for long is that businesses, especially in the financial sector, are rapidly waking up to the many indisputable benefits of the technology. According to one estimate, the market for blockchain technology is expected to zoom to $23.3 billion, mostly due to rapid adoption by the financial sector. This means that virtually all businesses, big and small will be impacted by it sooner than later.
So, What Exactly Is Blockchain Supposed to Be?
In simple terms, blockchain technology allows people and organizations to conduct financial transactions instantaneously on a decentralized network without the involvement of middlemen. All transactions benefit from total security while the use of cryptographic encryption algorithms ensure that records cannot be altered once created. As the term explains, a blockchain is a chain of blocks of data recorded in a specific order. The data contains vital information like the transaction amount, date, and time as well as a digital signature regarding the participant making the transaction. It also contains information distinguishing one block from another in the chain in the form of a code known as “hash”. The blockchain can also be represented as a ledger with each block of information representing new transactions.
Highlights of Blockchain Technology
Allows transactions to be made and verified: Participants using blockchain can very easily make transactions. The minute a sale is made, the record gets updated on the ledger, a copy of which is available to every participant. Since the process is automatic, participants do not have to add the details of every transaction on the copy of the ledger maintained by them. Transactions are also verified automatically and instantaneously according to the rules set by the participants to certify the validity of the transactions. Any transaction that is out of line is flagged, which means that nobody can change the records as and when they want it. The minute a record is changed on one copy of the ledger, it will be automatically out of sync with the rest of the copies available with other participants. The democratization of security is one of the strongest draws of blockchain technology that is at the heart of cryptocurrencies popularly used as online casino real money NZ as mentioned on this website.
High speed of transaction processing
Another reason for the surge in popularity of blockchain technology is its high processing speed. The copies of the ledger containing the updated details of the transactions are made in microseconds by the computers; the speed is especially faster since the blockchain is decentralized, which means that there is no central server load to compromise transaction processing speeds.
The beauty of the blockchain technology is that it operates without being controlled by a central authority, which means that participants can add and verify transactions without having to abide by the rules of any central authority
Because all participants in the blockchain network have the same access to the decentralized ledger system as well as the rulebook, everyone is at par. Everyone can see the details of the transactions made on the network at various points in time whenever they require it. To avoid the problem of unscrupulous nodes getting added to the network, new computers in a blockchain network are required to appear in a consensus test to be certified as being trustworthy. Only when a computer passes the consensus test, is it authorized to add blocks to the existing blockchain.
Even though there are very tangible benefits of using blockchain technology, the biggest drawback is that for it to be successful, everyone on the network has to cooperate. The transparency of transactions needs to be ensured so that other participants in the network can easily verify it. Getting everyone on the network to agree on a common security protocol can be difficult and many companies might hesitate to junk their own safeguards. The other aspect that many businesses may feel uncomfortable about is the lack of regulation of the technology at this point in time. No government has yet come to terms with this new technology that threatens to disrupt the existing financial systems.