The Beginning of the Financial and Security Revolution: Blockchain
The centralized financial system, as well as the lack of ability to thoroughly analyzes financial transactions and the risk of tampering with bank data, have been deemed a severe problem since the debut of the new banking system in the nineteenth century. Traditional banking and financial transfers have always had the potential for financial corruption and money laundering because to the centralization of financial power in a single managing centre, despite their many advantages. Banking systems appear to be altering at a rapid pace as a result of the introduction of Blockchain technology. Of course, it should be noted that, while Blockchain technology was created with the goal of establishing financial systems, its applicability has developed to the point where it can no longer be considered limited.
Blockchain technology is only ten years old; in fact, this groundbreaking technology was born only ten years ago! However, in such a short period of time, it has had an influence comparable to some of the twentieth century’s most significant innovations. However, before we explore the benefits, how it should be used, and its future, we should first understand what Blockchain is and how it works.
How Does Blockchain Work?
The words block and chain combine to form the word Blockchain. In fact, this technology is a series of interconnected bricks. Blockchain is a form of data registration and reporting system, in general. It differs from other systems in that the data saved on this type of system is shared among all users of the network, and the possibility of removing and changing the registered data is nearly impossible due to the use of encryption.
The first implementation of this technology was Bitcoin, which used Blockchain to store information about users’ holdings. Bitcoin would be the first software on the Blockchain operating system if it were an operating system. Any information, from a person’s misdeeds to account information for assets like Bitcoin, can be kept on any block. Data is stored on blocks and linked together by chains in this technique. Previous hash blocks are included in subsequent hash blocks, and data is constantly validated. On each Blockchain, a unique mathematical function given by the developers is used to generate a hash. The smallest change in a block’s information will completely change its hash.
If a character is added to the information of Swiss towns, for example, the hash block changes, and other blocks become invalid, which is why this technology is known as Blockchain or the chain of blocks.
What happens if someone modifies the content of a block and updates the hash of the following blocks? This is doable, however the Blockchain network’s distribution must be considered. Blockchain data isn’t kept on a single computer or server. A version of the Blockchain will be sent to any computer or system that connects to the network.
In fact, Blockchain technology is not a fundamental technology in and of itself; rather, it is the result of a mix of hashing processes, collective distribution, and a variety of other technologies that has given rise to the concept of Blockchain. The notion of Blockchain technology is entirely made up of three basic and main technologies, which were created by combining several technologies. These three technologies aren’t brand new. Their collaboration, on the other hand, creates a new technology.Three fundamentals of Blockchain technology.
- Encryption and the private key
- A public ledger and a distributed network.
- To urge users to collaborate in confirming transactions, retaining their records, and maintaining the network’s security, rules and a financial incentive (typically monetary) are used.
The existence of a unique electronic signature for each transaction in Blockchain ensures users’ ownership, but ensuring the security of digital communications requires more than just controlling ownership. Even while public and private keys and digital signatures solve the problem of identity, Blockchain activity should be as open as it is secure, and anybody should be able to make and confirm transactions. A distributed network is used to accomplish this.
The exact workings of Blockchain are quite complicated, necessitating a separate investigation. To use Blockchain technology as a simple user, you do not need to understand how it works. You do not need to understand how it works, just as you do not need to understand how the internet works.
Blockchain: Its Importance and Applications
As a new solution, Blockchain has a wide range of applications, and in almost every industry, a specific and customized kind of Blockchain is utilized. The Blockchain used to track foodstuff and the Blockchain used to track Bitcoins, for example, are radically different in terms of how they work, but the basic premise is the same. However, in order to fully comprehend the significance of Blockchain, its relative advantage must be evaluated in comparison to other similar systems.
With a better example, the benefit and need for a dispersed network may be understood (if a tree falls). If a tree falls in a forest and dozens of cameras record the moment it falls, we can be sure and have visual proof that the tree fell, even if the facts (how or why it happened) are unclear. The fact that Blockchain has such a huge network is what gives it so much value. People who are officially known as validators in this network are similar to people who have cameras and record evidence before reaching an agreement. Instead of using a camera, the confirmation of evidence is done using mathematics. In simple terms, the size of a Blockchain’s network is critical to its security.
Processing power is one of the most intriguing aspects of Blockchain. In reality, the processing power of a Blockchain network can rival the combined transaction power of hundreds of banks, and the combination of encryption (private and public keys) and a dispersed network allows for a very functional form of digital interaction.
We can also enter conversations regarding Blockchain’s future and possibilities by clarifying and defining how it operates. In reality, knowing function clarifies the significance of Blockchain. Blockchain is a critical technology that may dramatically improve security and proof of work in any financial, economic, social, or even political ecosystem.
Even huge food firms around the world, such as Nestle, utilize it to track foodstuffs, production dates, and how source materials are mined because security and reliability are so vital. Sierra Leone is the first country in the world to hold an election using Blockchain technology, and it can be argued that with Blockchain technology, the risk of vote tampering and fraud is virtually eliminated.
Banking and Blockchain
Banks and banking are two of the world’s most important markets. Many of the world’s financial, political, and even cultural affairs are intertwined with banking and its various services. On the other hand, Blockchain technology has spooked a number of traditional banking systems.
Payment systems and financial services have grown significantly as a result of the virtual world and a range of technologies. However, the emergence of Blockchain, a decentralized system that eliminates the need for middlemen in financial transactions, is causing a global revolution. What does it mean when middlemen are removed from transactions and trades? Are financial institutions and banks terrified for no reason? Is the concern of Blockchain consuming all of today’s banks’ chances and statuses unfounded?
This is clearly not the case. Traditional banks’ worry of the emergence of a Blockchain, which can turn into a connecting bridge between individuals without wasting time or money, appears to be logical. The truth is that banks are not quick enough when it comes to conducting banking tasks. As a result, different foreign marketplaces are unable to communicate and trade at a fast enough pace. Furthermore, middlemen and the requirement for decentralized systems that connect trade partners with one another via a third party need a relatively high cost for deals. As a result, the requirement for a decentralized system appears to be optimal.
One of the most significant infrastructures for organizing commercial activity is Blockchain. In this platform, all events that take place between two people or companies are meticulously recorded. As a result, tracing each transaction is relatively straightforward. There are no central organizations or institutes in such a network to organize anything. As a result, each organization and individual should be responsible for their own operations. It appears that in this state. Companies’ financial systems will be overhauled, and a form of self-regulation will take place. Blockchain activities should not be confused with Bitcoin trading.
Cryptocurrency transactions are one type of activity that can be carried out on the Blockchain platform. This infrastructure can be used in a variety of ways, including education, communication, politics, and voting. In reality, Blockchain can be used whenever there is mention of a free communication system.
We can’t go into depth about the future of banking or Blockchain and make predictions about them. However, it is clear that, in order to survive and flourish in the future, both of them will need to work together. Many financial and Fintech businesses are creating Blockchain-based services, indicating the prospect of a collaboration between banking and emerging decentralized technology. Though it’s worth noting that several of the world’s most respectable institutions are currently embracing or developing Blockchain technology to improve transaction and process security, speed, and capacity. One of the largest banks in the United States, Bank of America, is building an exclusive Blockchain system for financial transactions. This bank, on the other hand, is currently employing this technology to improve the efficiency of its ATMs.
User Security and Blockchain
If we want to address the issue of security, we can utilize Blockchain to connect millions of users around the world without the need for a middleman, which means communications will be secure without the need for oversight from central organizations and institutes. Blockchain appears to be capable of preventing scams and frauds in a variety of user transactions and exchanges, as well as preventing data theft on the internet.
The Blockchain network was created and constructed in such a way that it does not require any central oversight. Any user on the network can contribute to the data creation and storage. In the creation and confirmation of the data, all users have a role. As a result, erasing or altering the data will be impossible.
Hackers should destroy the data that is registered in each user’s computer in order to destroy the Blockchain network and commit fraud on it. Because there are millions of machines and users, the chances of fraud and scam are slim to none. As a result, even if a large number of computers are hacked, the previous data will be stored on a large number of other computers known as nodes in the network. As a result, compromising the Blockchain network’s data is nearly impossible.
Because of this sophisticated structure, the possibility of securing data in the virtual world has significantly increased. This type of infrastructure isn’t just for financial problems. This communication structure can be used to store and record a variety of information. The likelihood of fraud from any data to be minimized is reduced by registering and maintaining data on the Blockchain.
Virtual presence and living are becoming increasingly common by the day. Different components of technology are being created, and their introduction into the lives of regular people will necessitate a new type of data protection. We’re dealing with a really large network on Blockchain, and it’s quite tough to steal or tamper with its data. Some corporations have attempted to migrate their data centers to the Blockchain architecture so far, and this indicates that other organizations may soon follow suit. In reality, Blockchain has a significant potential for becoming the preferred technology of businesses and institutions.
Such a system benefits the chaotic environment, which is utilized by superpowers in a variety of ways, and provides the opportunity for everyone to have their own space. Many economic transactions that are subject to various sanctions are put on hold with the help of Blockchain. Blockchain will give free communications to everyone in any part of the world, as well as financial, political, and even cultural and social problems in a limitless and borderless manner.
Food Market Development and Blockchain
The food industry, as previously said, is one of the world’s major industries and one of the most critical concerns in the subject of global health. Blockchain is also being considered by the food, hygiene, and health industries.
Because of the health-care system’s flaws and a lack of effective planning in the sector of hygiene and health, the rate of growth and efficiency has been slow. Though we do mean the creation of medicine and medical gadgets when we say it isn’t that wonderful. However, we envision an interconnected network through which everyone can access a variety of services and facilities on a large scale.
We can construct a network of data that is tamper-proof and transparent by using Blockchain. The challenge of transmitting medical data and patient information from one component to another is one of the most serious issues in health-care systems.
Because of the existence of Blockchain, all components of a medical system now have access to a network where patients’ information and medical data are totally and completely recorded without any changes. With the help of the Blockchain system, patients’ data and cases will be conveniently stored, and access to them will be quicker and faster.
Patients, in addition to organizations and hospitals, can use Blockchain to track the progress of their cases and track their progress. As a result, using this technology, many of the unnecessary and bureaucratic organizational costs will be eliminated.
However, some Blockchain critics claim that the system is inefficient in the sphere of hygiene and health, but most of these criticisms are based on experimental versions. Even the most gloomy critics acknowledge that the development of Blockchain would likely boost the efficiency of hygiene and health management systems.
Change in Social Infrastructures and Blockchain
Blockchain is also being adopted by social media platforms. There hasn’t been much time since different social networks were greeted with such fervor. The powers of colorful networks like Facebook and Instagram have piqued the world’s interest. These networks have a lot of potential and are really interesting. Given the availability of such networks, and the virtual network in general, communications have grown at an incredible rate, and infrastructures like Google have had a global influence with their many services. The narrative of colorful technologies, however, does not end here. With the introduction of Blockchain technology, communication has taken on a completely new shape. We no longer have to be concerned about user data being leaked from various social media platforms. It will no longer be possible to exploit communication channels and use user data for political or advertising objectives. But how do you do it?
Ghost Talk is one of the newest Blockchain-based technologies to hit the market, and it employs a decentralized payment structure to distribute rewards and presents to users. In fact, people who utilize the social messaging system on this platform will have access to some functions and will be able to obtain scores.
Unlike other social networks, Ghost Talk considers prizes and ratings for content production, sharing, and other user activity. Token prizes and cryptocurrencies that can be saved on the Ghost Talk electronic wallet are among the rewards and scores available.
Ghost Talk places a high value on content production, and through the network that it has built, it is possible to improve and advertise. It means that individuals, enterprises, and particularly small businesses can use this infrastructure to advertise and create content. Any content created on this network will be rewarded with perks and awards that may be converted into tokens and cryptocurrencies later. The precise technique that Ghost Talk implements in its vision is what makes the future of Ghost Talk so bright in the minds of very skilled professionals and makes them look at Ghost Talk with optimism. This service’s appropriate methods include the option of advertising and content development, which provides a win-win situation for all beneficiaries and users.
One of the benefits of the emergence of various social networks, such as Ghost Talk, is that it lays the groundwork for future growth and collaboration between cryptocurrencies. Acceptance of various cryptocurrencies as a tool for making transactions in these new infrastructures could drive up the price of these cryptocurrencies and give them legitimacy. Currently, no one can deny the capacity of cryptocurrencies and networks like Blockchain. Everyone understands that these new technologies will continue to increase in importance sooner or later. More relationships between cryptocurrencies and diverse platforms, on the other hand, can act as a catalyzer for the expansion of these new technologies. We shall witness a heavier and hotter rivalry market from them if the ability to make transactions and execute activities with multiple cryptocurrencies in various platforms and networks is available.
Blockchain and Its Importance
Many of the world’s most important industries will, sooner or later, consider Blockchain technology as a modern solution for financial, security, and information challenges. The financial potential of Blockchain is so significant that the World Economic Forum predicted in 2015 that by 2025, more than 10% of global GDP will be held using Blockchain technology. On the other hand, more than a third of the global health and hygiene businesses are predicted to employ the Blockchain network to protect their users and customers’ information until 10 years from now. This expansion will cover not only enterprises in the field of producing pharmaceuticals, but also hospital and medical centre information management systems. As a result, Blockchain technology is predicted to become an inseparable element of various businesses around the world by the third decade of the twenty-first century.
All of these are linked to major industries, as well as macroeconomic and social policy. What, on the other hand, are the immediate benefits of Blockchain technology to humanity? Perhaps a better way to answer this issue is to look at how Blockchain is being used in major social and economic domains.
Property Registration
Blockchain significantly improves the efficiency of registering any type of data while also ensuring that the data is entirely transparent and accessible to everybody. Because properties are among the things with a significant risk of fraud and a lengthy registration process, this technology can be utilized to improve the efficiency of its function. Several countries, including Russia, Honduras (2015), and Georgia (2017), have used Blockchain to register properties thus far.
Poll
A polling system can be implemented using Blockchain. However, the most significant distinction between a Blockchain poll and a traditional poll is the “validity of its data.” Because no one can edit or tamper with data on Blockchain, if 70% of individuals believe choice one is better than option two, no one can change that 70% to 69 percent. While traditional polling techniques have the potential for fraud! Validating and preventing fraud in electronic elections using Blockchain is a fascinating topic in and of itself.
Management of the Supply Chain
Currently, a number of supply chain-related startups have been established. Blockchain technology offers traceability and efficiency benefits in supply chain management. The Blockchain technology may be used to track the movement of items, as well as their origin and quality specifications. As a result, they bring with them a new level of transparency. Other advantages of Blockchain include the ability to ease procedures such as ownership transfer, insurance, the manufacturing process, and payment.
Industry of Food
Food fraud has become a major issue in the worldwide food sector. Although there is no universally accepted definition of food fraud, it may be claimed that “any attempt to modify food, delivering deceptive advertising through tags, and introducing unhealthy food supplements for financial advantage” falls under the category.
The food supply chain is more transparent thanks to Blockchain. The data associated with a food item is added to the Blockchain when it is carried. When the final item is displayed on store shelves, all current locations in the food chain relating to that item are updated and completed, and this is repeated for the process of changing or adding new material to that food item. The regulator and customers would have equal access to data, ensuring a high level of transparency.
Education
Blockchain can be used by educational institutes, universities, and schools to store data connected to evaluation examinations, registering and giving educational certificates and licenses, validating student exchange, and science and technology transfer.
Cryptocurrencies
The quick rise of Bitcoin and cryptocurrency markets was not without purpose or validity. These currencies provide quick, secure, and low-cost money transfers all across the world. While there are financial service companies that execute international transfers, such as PayPal, they charge a high cost every transaction. Other peer-to-peer payment mechanisms frequently come with their own set of restrictions. For example, there are constraints in terms of space and the amount of money that may be sent. This is why businesses, like regular users, are adopting cryptocurrency, not only because it is more secure, but also because it provides flexibility and eliminates the need for a central authority to manage accounts.
Smart Contracts
Ethereum was the first to propose smart contracts. A smart contract is a programmable contract that is stored on the Blockchain until the participants fulfil the terms of the contract. The targeted program will execute automatically once the considerations have been completed. For example, a contract could specify that a given amount of Bitcoin be sent to a specified wallet on a specific day of the month (e.g., for paying a home rent). Smart contracts, like any existing Blockchain transactions, cannot be deleted.
You can accomplish your considerations and transactions using smart contracts without the necessity for an intermediary or a third party. This contract is actually a collection of computer programs saved on the Blockchain network. Smart contracts contain all relevant information about the contract terms, and all contract stipulations are automatically fulfilled. Both parties to the contract feel secure in the knowledge that they will receive what they want if they use these contracts.
Accounting
In fact, the nature of Blockchain was inspired by accounting, and one of the best Blockchain applications is also in this field. The use of Blockchain to record transactions effectively eliminates human error and protects data from unintentional modification. Every time a record is moved from one Blockchain node to the next, it should be validated. In addition to accuracy, ensuring that your records are traceable, such as through a high-level continuing audit procedure, is essential.
Naturally, the entire basic-level accounting procedure becomes more efficient. Instead of holding separate records, the companies might collaborate on a shared unit register. The company’s financial information integrity will be ensured.
Network for Energy Distribution
Similarly, today’s energy generation networks are controlled and managed by centers, which take charge of and manage energy distribution. However, the rapid growth of renewable energies such as solar energy and even battery technology has resulted in the emergence of small local distribution networks. As a result, if you produce energy at home or at work, you may store it in batteries and use it anytime you choose. It’s even possible to sell it to your neighbors.
Such occurrences can lead to the preservation of energy and the avoidance of its loss. Because energy loses and charges more as it travels further, the longer it travels, the more loss and charges it will endure. This strategy eliminates the need for an intermediary, allowing people to deal directly with one another. Energy production firms are now the reliable link between the user and his or her requirements (energy). They take their part because they control the infrastructure.
Journalism
According to Tapscott, Blockchain has the potential to revolutionize journalism as well. For example, the reader can pay one-tenth of a penny for each storey, news, or article read (a hundredth of a dollar). As a result, the reader judges which material is more important or useful, and pays for it. According to Tapscott, it might be a strategy to deal with fake news in the face of actual and useful material that journalists provide. Of course, from a more professional standpoint, such a strategy may favor popular authors and lead to the dismissal of essential but less popular news.
Industry of Medicine
In the medical profession, where patient records are occasionally tampered with, physicians and hospital administrators can keep a secure file of patient records and make it available to hospitals, therapy centers, and even authorities if necessary. It has the potential to reduce data management risks and expenses while also improving data storage and transfer security.
Biometry will be used to access and update the electronic medical records stored on the Blockchain. Furthermore, it can enable open access to data connected to patients’ records, reducing the cost of transferring records between different vendors.
Data Retention
You currently store files on Dropbox or Gdrive. The primary issue with utilizing these services is that you must place your trust in them. The states have the power to compel them to reveal your information. Your information, on the other hand, will be saved in the network with unique encryption if you use Blockchain technology. As a result of this problem, the charges are reduced. Even if your computer has free space, you can rent it. Storj is a nice example of this.
Producing and Monitoring Products
Fake goods are sold to clients in roughly 8% of global exchanges; as a result, manufacturing and distributing goods and services have long been intertwined with quality and control concerns, and businesses are constantly faced with rigorous verification and regulations-adaptation activities. The final consumer pays a high and escalating price for this quality guarantee in the manufacturing business. The Blockchain offers the possibility of reducing cumulative charges resulting from supply chain regulations. Protecting intellectual property of information and designs, supervising manufacture in accordance with designs, ensuring on-time payment, reducing reliance on third parties such as banks, inspectors, attorneys, and even internal audits, and reducing middle managers are all possibilities when using this surveillance technology in the supply chain. As a result, Blockchain has the potential to revitalize manufacturing and industry.
Document Registration
The majority of your ownership records are now recorded on paper and can be manipulated. Human errors will be reduced as a result of this technology’s utilization of computers. If a person manipulates the information in the blocks and changes it, the hash will change, and this modification will cause the blocks’ sequence to be broken. No one can change these barriers because of all of these concerns. Everyone will be able to see all of the changes. As an extended public ledger, Blockchain can improve any registration. In this sense, property registration is a good example. Property registration is currently quite expensive, requires a lot of human resources, and is particularly vulnerable to fraud when done the old way.
Currently, certain countries use Blockchain to register properties. Honduras was the first country to implement this technology in 2015, albeit its present status is unknown. Georgia signed a contract with Bitfury Group this year to establish a Blockchain system for property registration. According to an official report, Hernando Desoto, a well-known economist and advocate of property rights, will be one of the project’s consultants. Sweden recently declared that it will use this method to register properties on a trial basis.
The Internet of Things
Cisco estimates that by 2020, 50 billion gadgets will be connected to the internet. Given the large number of devices that send, receive, and execute commands like turning on, dialing, and moving, the data accuracy in this route may result in unpredictably high charges. Blockchain can be used to track billions of connected devices, execute transactions, and allow devices to communicate with one another. This decentralized method eliminates the risk of a network failure and creates a more resilient ecosystem for the devices. Furthermore, the Blockchain encryption technology ensures that the data of clients is kept confidential.
Capital Raising
It is the most effective Blockchain application! Blockchain has introduced a new concept and revolutionized money raising. The initial coin offering (ICO) is a novel technique to acquire funds that allows anyone to contribute from anywhere in the world. You should issue a receipt to everybody who invests in your company. ICO stands for initial coin offering, and you can send your receipt to the investor in the form of produced tokens. Your Blockchain network is where the tokens are kept. These tokens can be used to access your company’s services or even exchanged for other tokens. Tokens are, in fact, a new generation of company stocks that are traded on a secure Blockchain platform.
Digital Identity
What do you think of the idea of a decentralized, encrypted registry? What about a digital identity? Many authentication challenges can be solved with Blockchain technology, which can provide a unique, irrefutable, and secure identity. The approaches now in use are based on storing information in an insecure database. Authentication is irrefutable while using Blockchain technology, and it is done via digital signatures and the private key.
Blockchain Criticism
Despite the fact that Blockchain technology has many vital and clear features, it has always been criticized. It contains a wide range of professional perspectives; however, one of the most significant objections of Blockchain is its application in the financial sector. Despite acknowledging Blockchain’s ability to evolve in various industries, Wei Kai, chairman of the China Information and Communication Technology Academy’s Blockchain research branch, feels that corporations have yet to solve three significant financial concerns associated with the technology. According to this Chinese researcher, Blockchain society should continue to work on issues such as data privacy, application, and the ability of Blockchain to interact with the current economic system. One of the main issues is coordinating surveillance tactics across various judicial fields around the world.
Today, Blockchain is confronted with a more serious issue known as scalability. Only a few thousand financial transactions can be processed per second by the fastest property-dependent Blockchain systems. This transaction capacity will reach a maximum of 25,000 transactions per second (this figure is somehow similar to the current capacity of VISA). According to the Depository Trust and Clearing Corporation’s 2018 report, each new technology should be able to scale up to two or three times its present maximum capacity, as well as do 50,000 transactions per second. There is no way for the financial system to use it to avoid depending on centralized transparency and settlement systems in order to forecast future physical restrictions ahead of transfer speed for a large volume of data.
The Future Is Coming Soon
We can only hope that Blockchain’s future is bright and predictable. There’s almost no question that this technology will be used in every sector of the global economy for the next ten years. It is more than anything else because of its decentralized, dependable, and, of course, regulated Blockchain environment. However, it should be noted that the development of Blockchain technology in the financial and banking sectors is subject to the judicial norms of several nations, making forecasting problematic. In fact, countries’ financial rules are always changing, and because Blockchain technology is still in its early stages, we cannot be certain that countries all over the world would agree on financial transfers.
Considering all of these factors, Blockchain will cause significant changes in our society, many of which are unpredictable, but we may hope that this technology will help to alleviate the challenges that civilizations are facing.
Written by Pooyan Ghamari
Founder of Counos Platform
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