“Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.” Vitalik Buterin, inventor of Ethereum

Ever wondered the amount of effort it takes to get a house registered?

Visiting different government institutions and getting huge stack of papers signed.

Now even registering a vehicle is not so easy. Or just imagine the health records of each patient that are maintained by every hospital, Or how frustrating the insurance claim process can be.    

 

Blockchain Technology’ – A shared source of trust which is equally Innovative, Efficient and Transparent that can ease all the processes mentioned above and has applications beyond imagination.

 

People are ignorant to this technology as they tend to interpret it as Bitcoin and are aware of all the illegal purposes Bitcoin is used for.  Let us start by clearing that Bitcoin is just one of the applications of Blockchain technology.

Just take Blockchain as Windows or Linux operating system and bitcoin as one of the applications that can run on it. Bitcoin is just the tip of the iceberg and Blockchain Technology is the Ice Berg here.

How does it work?

Blockchain is a shared, decentralized (distributed) ledger that runs on smart contracts and has potential to track and trade almost anything, be it Tangible or Intangible, results in shedding cost and vulnerability that are involved in current processes. It basically records transactions in Blocks and each transaction is recorded using Hash function (Digital Fingerprint) which is unique for every transaction. Each consecutive block created records the transaction of the previous block, thus linking it. In such a way it assures authenticity and strengthens the verification of the previous block. Previous blocks cannot be manipulated in a blockchain and also all the transactions are verified by the relevant stakeholders/participants {also known as NODES}.

 

The network of Nodes make up the blockchain. The Node which is basically the computer connected to the blockchain network gets a copy of the blockchain which gets automatically downloaded upon joining the network. Then these participants can see everything that is available as per the requirement.

 

Thus, Blockchain was given this name as transactions are recorded in blocks and they are linked together forming a chain. More the transactions , Bigger the chain !

 

The first application of Blockchain Technology

We are able to eliminate the distance between the sender and receiver in a transaction by using various methods of our current transaction settlement system, But have you ever wondered the time it takes to settle an overseas transaction?  Also, a large chunk of people in this world still don’t have a bank account with volumes of transactions increasing day by day.

 

To address such complexities, Bitcoin, a digital currency was created by a sphinx-like individual or a group of people known as Satoshi Nakamoto. It was primarily developed to cater the need for an efficient, secure, cost effective and reliable system for various monetary transactions.

It is totally decentralized. No central bank issues it nor does it get printed anywhere else. It is created through a process called mining”, where computers crack complex mathematical problems to create one.

Now the world is seeing a large number of Cryptocurrencies like Bitcoin which are ready to disrupt the financial sector.

 

“I believe there is a future for blockchain technology, and [that] technology will play a big role in changing and reshaping our industry.” –  Sergio Ermotti UBS CEO

 

Advantages of Blockchain

  • Reduced time – Faster settlements by reducing time from days to minutes.  Also there is no regulatory process of transfer as of now.
  • Cost savingBureaucrats/Intermediaries are eliminated and moreover the duplication will come to an end as the required participants can access the share ledger.
  • Consensus based – All participants must agree and establish a transaction as valid. Also each participant’s stake is involved somehow and thus they do not hamper the networks security.
  • Secured – Only the participants can access it. It is secured by cryptography and permissions which are tamper resistant.
  • Improved monitoring– Shared ledger. Any concerned authority can have a look at the information required for regulatory purpose.
  • Increased efficiency – Speed has increased with negligible error.

 

Various other uses of this technology are :-

Supply Chain Management

Cyber security

Healthcare

Media

Communications

Energy

Education

Internet of Things (IoT)

Real Estate (speeding up the process)

Identity Management (secure storage of identities)

Voting (secure online voting)

Record Management

Taxes

Financial Management/Accounting

Data Storage (Distributed Cloud Storage)

 

Most of these applications are still underdeveloped and therefore potential of the blockchain applications are still unkinking. In near future the Blockchain technology will become the gold standard and no doubt the Blockchain Technology is transforming the very pillars of our economy. The understanding of trade, trust and ownership is being changed at a much faster pace now.

Source of infographic: https://twitter.com/essec

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