Blockchain, Bitcoin, and Cryptocurrency… these terms have become the word of the century. Well, what are they? To explain in laymen’s words, blockchain is a kind of technology that allows cryptocurrency to exist.
In addition to this, ‘Bitcoin’ is the name given to the most commonly used cryptocurrency.
Furthermore, cryptocurrency is a medium of financial exchange similar to that of any currency. Nonetheless, it is a digital form of currency that involves encryption techniques in order to control the creation and confirm the transfer of monetary units.
So, what exactly is blockchain technology?
Simply put, blockchain technology refers to the decentralized ledger of transactions across a network further referred to as a “peer-to-peer network”. This technology allows the users themselves to confirm transactions without the presence of any kind of a central authority to pass the transaction. The potential applications of blockchain technology comprise cryptocurrency transfer, settling trades, voting, and various other aspects.
How Does Blockchain Technology Function?
Blockchain technology works in a process and includes quite a few steps.
The very first step involves someone requesting for the transaction which is further sent to a peer-to-peer network comprising of computers, also known as nodes.
It is this network of nodes that confirm the transaction and the status of the user who has requested using familiar algorithms. Here, the verified transaction involves the cryptocurrency, the records, and the other information of the user.
With this step, the primary transaction is completed where the brand new block is added to the existing blockchain in such a way that it is permanent and unchangeable.
And now, when that is verified, the requested transaction is amalgamated with other transactions to prepare a new block of data for the ledger.
What are the Applications of the Blockchain?
The digitization of the world has made cryptocurrency the asset of the century. It is widely used in various industries. However, the applications of it are massive in the following ones particularly.
The Automotive Industry
Consumers can and do use blockchains for fractional ownership of autonomous or independent cars.
The Financial Services Industry
In the financial services industry, blockchain exchanges are super-fast, cheaper and convenient as they save billions of dollars as transactional costs. Moreover, this improves the transparency level of the transaction.
The Voting Industry
With the use of blockchain codes, members of constituencies are able to cast votes through their smart gadgets which leads to immediate verified results.
The Healthcare Industry
The encrypted health information of patients can be exchanged with numerous providers without the risk of a privacy breach.
What are the Other Potential Applications of Blockchain?
In contemporary times, blockchain technology is regarded as the new-age software which improves the process of business and how it is done. It is a collaborative type of technology that allows huge transactions in businesses while reducing the ‘cost of trust’. Therefore, they provide for an increased amount of returns compared to any other kind of traditional form of internal investment.
Institutions that provide financial services are digging deep and exploring the options and probabilities of using blockchain technology in every aspect of the transaction- from clearing to settling to insurance. Although a little skeptical, nonetheless blockchain technology has the potential to radically alter the future in the most competitive of ways, especially for the financial services industry.