Blockchain Technology: The Changing way of finance

From the earliest of times, Transacting and Exchanging has always been a centric interest for human beings. Creating value is a basic nature of man and hence, the human has focused a lot on strengthening the channels for smooth and verifiable transactions. Be it The Barter System, the concept of the financial institutions or taking the business into the digital front, each step brought a significant change in the way human transact.  Technology has been a major player in the 21^st century and the next big change is bringing in is seen to be a complete transformation of the transaction methodology humans will adopt. The Technology under focus is “THE BLOCKCHAIN”.

What is Blockchain Technology?

Blockchain Technology is referred as the ‘Second Era of the Internet’. When we talk about the internet, we are generally talking about all the information which the internet fetches for us. Be it our emails, PDFs or entertainment library, the Internet has made it accessible to us within seconds.

It is time to talk about the internet in broader terms. It’s time to enter into the second era of the INTERNET. Hence, It is time to talk about THE BLOCKCHAIN.

BLOCKCHAIN is a decentralized database that performs and stores all your transactions in a peer to peer network. What’s important to notice is the word ‘decentralised’. You see, every transaction you perform in today’s globalized world requires a Third party medium to lower uncertainty. Third party medium includes the Central Banks and government financial structure. These agencies build your trust to combat the uncertainty involved with money. ‘Uncertainty’ has always been a big issue for human beings and it too has given birth to many financial institutions across the globe. Douglass North, The Noble Memorial Prize recipient stated, “Financial Institutions are doors to lower uncertainty.” Hence, all the transactions which involved these financial institutes are centralized, i.e. they are affected by the external forces. They assure certainty at the expense of the taxes levied upon the service they provide.

When we talk about the blockchain technology, we are talking about something which is not owned by anybody but everybody as a whole. Hence, decentralized. Blockchains are not owned by any organization or government and therefore, its free from any external forces. The big advantage that it brings is that one gets rid of the heavy taxes if they transact through it, making it more convenient to be used over the conventional Third party institutes.

How does a Blockchain work?

Blockchain Technology is a big leap in the financial industry. A blockchain can be referred to as a digital ledger in which all your transactions are well secured and recorded. In a blockchain, everyone owns a network and can see where is the money moving, how much is the money moving and even, whether the transaction made is valid or not. Inside of a blockchain, everyone who is a part is the owner of his/her own money. Some unique features of the blockchain are-

1.)    It is Open:- In a blockchain, every information related to the transaction can be well tracked and managed, which raises the transparency of the entire process.

      Check: Finance: The Root of every monetary structure

2.)    It is Distributive:- Within a blockchain, whenever a transaction is made, a copy of the transaction is sent to each and every person who is linked to the blockchain network. You can very well get an idea that how secure a system is when every person has a copy of every transaction. This extends the Trust Protocol to an entirely different level and raises the standard of the secure transaction.

Are there chances of fake transactions?

In any field associated with monetary deals, questions of fraudulence are common. When we talk about the blockchains, are they cent percent fraud-proof. Well, the answer is a big Yes; thanks to the anonymous developers of this technology who took advantage of the cryptographic mathematics to encrypt all the transactions, hashing it with a key and certificate to verify a valid transaction. To play this role, the blockchain workforce, known as MINERS are always competing to manage the task.

The role of a blockchain miner is to validate a transaction. After validating, a miner finds a special key that enables the encrypting and decrypting of a new transaction. This key is a secret mathematical formula which is exchanged between a seller and a buyer so as to verify and complete the transaction. In order to find this key, the miner applies hard computational methods and puts in a lot of time. The first miner to successfully fetch a key is awarded financial rewards.
When a transaction is done, the miner attaches it to a long chain of previous successful transactions and hence, termed as a blockchain. Now suppose an external agent attacks and tries to steal transaction codes. As he makes an attack, the previously linked transactions in a long chain are altered and the malware is known. Furthermore, with the copy given to every person in the network, the affected transaction can be identified and restored. Hence, you might have understood that how well the blockchain is secured. Well, the credit goes to the hard-working miners.

Check Out: Financial Transactions - changing ways of Transaction

Why Blockchain is believed to be the next giant technology move?

Financial and technological experts are busy debating upon blockchain being the technology which will affect few coming decades, in the same way in which internet technology affected the world in the last few decades.

Businesses and markets will witness a drastic change in the way they transact. Blockchain will be a major game-changer and this can be proved upon these grounds-

1.)    Creating a trust protocol: Being secured within its domain and each transaction visible to every node in a network, for the first time in the history of mankind, financial trust protocols are building in a peer to peer fashion.

2.)    One is the owner of his own assets: Blockchain empowers customers to be the owners of their own assets, without the interference of the external involvement of any financial institute or government.

3.)    Fast, reliable and cost effective: When transacted through a financial institution, a remittance ripoff takes about 3 days and ten percent in the form of tax. Blockchain completely changed this scenario, making transactions quick as to twenty minutes and taxation of less than two percent(in majority cases).

4.)    Ensuring proper value for creators: 

In all the Bitcoin discussions, one point which remains untouched is that the creativity can also be sold using Blockchains, which ensures the right value for the artist who is his/her own media house while selling his art using this technology.

Therefore, The Blockchain is emerging to be a new future technology who has a potential to completely change the way the world transacts. Any new technology sets a new benchmark in Industries, businesses and the markets: wiping out the conventional techniques. In a similar fashion, blockchain related currencies such as the Bitcoin and the Ethereum are the next major benchmark which the mankind will witness.

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