A record of US$3,025 has been made by a single bitcoin recently, and a staggering rise of around 200% in their value is expected this year.
A professor of finance at the New York University, Aswath Damodaran, also known as Wall Street’s “dean of valuation”, stated that digital currencies have replaced gold as a choice of investment among the young generation. Sooner or later, currencies like bitcoin and ethereum are going to contend against nation-state paper currencies.
The rising popularity of bitcoin currency, decrease the prominence of euros, dollars, pounds, roubles, and others. Most importantly, for anything to be evaluated as “money” - it must meet three functions - a measure of value, a store of value, and a medium of exchange. Hence, volatility in Bitcoin shows that it is a newborn in matching these three criteria, and incorporates the potential to go beyond.
Digital currencies, including bitcoin, is just a single application included in blockchain technology that makes them possible.
As explained in BBC, Blockchain is an effective method to record data i.e. a digital ledger of transactions, agreements, contracts, almost anything that requests to be individually recorded and verified as soon as they take place. The huge difference it makes by strong the ledger in more than one place - distributing across hundreds or even thousands of mainframes around the world. Every participant in the network have the access to this up-to-date version of the ledger, hence it’s quite transparent.
The security of cryptography is also included in Blockchain. Storing and transmitting data in coded form, united with peer-to-peer networks in order to create a mutual database of transactions that is confidential, yet controlled by no one.
If there could be a successful blockchain operation in various industries, we can predict a more digitally integrated global economy - perhaps which enhance economic growth and minimize poverty.
In order to manage and record the numbers and databases in today business - auditors, supervisory boards and so on, we essentially required a trusted administrators. However, the blockchain offers the ability to “distribute” such digital ledgers to others via a network of computers established all over. Basically, it dispenses with businesses that have trusted relationships with banking, auditing, solicitors, even aspects of government. As an example, property registers in Sweden, Georgia, and Ukraine have been switched to the blockchain.
When it comes to financing, rarely people lend to each other in a straight line. The banks are thus a source of trust. The advent of cryptocurrencies such as bitcoin or ethereum has eliminated the need of trusted third-party, by means of encrypted, secure database. This implication proves beneficial for businesses that value the method of payments verification and contract performance. Generally, most of the businesses.
The introduction of blockchain has made something unique that can be stored digitally without any hassle, without requiring an equivalent in the actual world. As an example, we include things like contracts, wills, deeds and share certificates perhaps require a piece of code counted in the blockchain - representing the exchange. Rather than making a trusted intermediary verifying transactions, the mainframes of the shared network of bitcoin participants themselves can make verification without paying any additional cost to anyone.
Truth and Trust
Across huge numbers of industries, this verification process holds the seeds of change. The distributed ledger – blockchain offers the ability of enhanced truth and trust in every system to which it is integrated. It can demonstrate everything at a given moment of time. Anything that currently exists from verifies contracts, ownership, payments to performance, can be transferred to the blockchain.
Users who currently manage or verify transactions, this would transfer the power away from them. Thus, a seismic alteration can be observed in the way - the world currently functions. However, with any shit in power, users holding power are reluctant to surrender it. Rather than start-ups, the ultimate “winners” in this scenario will come from existing companies, providing them a new system to work. As it simply requires buy-in and trust – established brands usually have this advantage.
You might wonder to know the advantage of blockchains?
By performing the role of record keepers and managers, blockchain enhanced decentralization, lessen the involvement of intermediaries while providing alternatives on how value can be stored in a better form. In order to prove ownership, physical as well as digital assets could be uniquely verified online.
The risks of crime, counterfeiting, and fraud, are reduced in the financial system, as transactions could be independently verified and traced, and stored on the blockchain. It is next to impossible to modify or falsify data due to distributed digital ledger. However, if this happens - data needs to be modified across all the related “blocks” include in the digital chain, further, any tampering would be visible. Subsequently, the cost associated would fall, make improvement in economic growth and prosperity.
Already, this dramatic disruption took place in the financial industry - the world’s largest custodian bank, BNY Mellon - for government bond settlement using a blockchain based platform. Also, Bank of England’s research focus areas is dependent on financial technology.
Further, the advantage would be: To make micropayments digitally possible. A country like India, where thousands of people yet don`t have access to banking, may acknowledge profound economic revolution – if else, it is brought within their reach, benefiting their future.
Taking Back Our Privacy
In online marketing and advertising industry, blockchain has made a greater alteration. It has feasted on data internet users, and social media platforms like Facebook have created, with an approximate of two billion users available. Similarly, Google and Amazon gather significant amounts of individualized data of their potential users to target adverts. It is predicted that blockchain could enhance our online privacy, enabling us to collection information digitally on our own unique blockchain and take a control of users - who can access it. Instead of allowing these organizations to record our tastes and preferences, this data would be reorganized and completely in our control.
In developed and developing countries, blockchain could enhance entrepreneurship – eliminating barriers created from embedded bureaucracy and corruption simultaneously offering a means to bypass existing power structures. Let`s consider an example of Everledger - the digital ledger that is tracking a real-life object - diamonds and prove their provenance and ownership. Eventually, the trust is enhanced in the system.
While the internet came into existence, it was disruptive that revolutionized many industries. Similar potential blockchain technology holds. However, transforming trust from the present “verifiers” to a dispersed blockchain system might take time, but as soon as it is introduced there would be a massive power shift to the masses – a completely revolutionary idea.
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