There are many digital currencies or cryptocurrencies in the world these days. If you are interested in cryptocurrencies, you need to know the technology behind it – blockchain. Investors these days believe blockchain will transform not only the financial services but also businesses and other industries.
The blockchain is known to maintain a growing record called block. Every block boasts of a timestamp and link to the previous one. It uses cryptography – a technology that ensures users do not edit the parts of the blockchain. It also ensures that the copies distributed to the blockchain are synchronised. Essentially, blockchains are designed as secure databases.
It was a concept introduced by Satoshi Nakamoto in 2008. However, it was first implemented in 2009 as part of the Bitcoin currency. To understand the full potential of the technology, it is time that you learn its benefits. Benefits of blockchain technology include:
It is decentralised
Imagine that the blockchain is an open public ledger. It does not have any intermediary and different nodes on the network only maintain it. In other words, it is a peer-to-peer network, which does not need any other party. Basically, there is no single authority or company that handles the chain.
It is failure-resistant
The network is resistant to failures because of the peer-to-peer network. It has no single point of failure. This means that the recorded transactions on the chain cannot be changed or altered making it a perfect ledger.
It is secure
As mentioned earlier, the cryptography ensures that peers cannot edit any transactions. Simply put, all the transactions are authenticated. Since it is a public ledger, all the records are transparent so everyone on the network knows about the transactions. No matter where you go, the transactions here cannot be disputed.
It is fast
The blockchain boasts of a new generation technology. This means that the system is very fast when it comes to transactions. In the case of making the transfer of funds, it will only take minutes. In the past, it used to take two to three days for the money to reflect in your account; it will take more time if you are transacting to other countries.
It is economic
You already know that it does not need any third party for the transactions to be successful. You will be happy to know that there is a nominal fee taken in completing the transactions. In the past, it was expensive. Apart from that, there is less paperwork, which makes it ideal among for business transactions.
It can increase the capacity of the network
The good thing about peer-to-peer technology is it enhances the capacity of the entire network. When you think about it, having thousands of computers working together lead to greater power and productivity.
Once you understand the blockchain technology, by reading the blockchain guides online. With this, you can make your own currency or even create your own smart contracts. Despite the benefits and the potential of the blockchain, one cannot simply discount legal issues revolving around it. As the technology becomes popular, it significantly changes the way parties transact. For this, regulators will want to monitor and regulate its development.