Financial experts around the world are falling head over heels for blockchain technology. Developed by the mysterious group known as Satoshi Nakamoto, Blockchain is rapidly changing how people think of making transactions and keeping records in the Internet age. Some people even claim that this distributed database could be even more important than the invention of the Internet.
Although this technology can make a huge impact on the post-industrial world, very few people know about what this online ledger is or how it works. In this brief article, we’ll take a look at a basic definition of blockchain and give a few useful examples of where this database’s purposes in the future. By the end of reading this piece, you should have a good idea about how this interesting database will influence your life and how you could potentially use it to your advantage in the economy of tomorrow.
What Is Blockchain?
Blockchain is basically an online ledger that records all value transactions around the world. Digital platforms record all Bitcoin transactions instantly, using “blocks,” which is why “Bitcoin blockchain” is so often synonymous. However, these two things are different. This database exists as hundreds of decentralized “nodes” all across the network. Every single node has the ledger of all transactions ever taken place on Bitcoin.
As the name suggests, blockchains are literally chains of data (or “blocks”) that are records of transactions. The people responsible for solving the complex algorithms involved in making each transaction block receive one Bitcoin for their efforts. Therefore, everyone making blocks has a financial incentive to do their work correctly.
But Blockchain takes this a step even further. Every new block needs at least 51 percent approval from all the other nodes before it becomes official. All this cross-checking makes this ledger incredibly trustworthy and virtually impenetrable to hackers.
Who Uses Blockchain?
A few developing nations are actually looking into using Blockchain technologies to provide a low-cost and highly trustworthy financial services to their citizens. Blockchain can provide financial security without the expense of actual banks. This is fantastic for countries like the Philippines where many nationals live abroad and send their money home.
This provides Philippine expats with a greater sense of security in their financial transactions without the overhead of having to use a bank. What the Philippine government tries to do is officially called “leapfrogging.” This basically means the Philippines is “jumping over” the banking sector that has been the bedrock of Western financial services to go straight into the world of Blockchain.
The financial incentive governments in developing nations gain by implementing these technologies is far higher than in any developed nations. This leads many financial experts to believe that the latest innovations in Blockchain will come from the developing world.
But it isn’t only the developing world that’s set to use this innovative ledger. For example, people who put content online are now getting more and more interested in using this database to help supporters make micropayments online. Non-profits and other organizations could potentially use this tool to help people give donations securely.
Business angles fund numerous startups. This way, these companies can experiment with this technology in Silicon Valley. Not only do people believe that this technology can be used for Bitcoin or other financial transactions, but they also believe it could play a key role in real estate, insurance, and even democratic voting procedures.
How to Implement Blockchain?
This distributed database is incredibly attractive for numerous financial firms. Still, the technology is still in its early stages and will take some time before it reaches maturity. That is why many people are cautioning firms not to adopt this latest trend too quickly. Since these ledgers are new, prices fluctuate greatly in the markets nowadays.
Also, the validation process for public ledgers is quite inefficient right now. The implementation of blocks technology requires careful strategic planning and a clear list of intended goals. Businesses should make sure that this ledger fits their existing business ecosystem. Moreover, they should think whether they can make the move from centralized financial services to decentralized financial operations smoothly.
3 Tips for Investing in Blockchain Technology
1. Investing in Developing Economies
As mentioned above, this distributed database will most likely take off in nations that don’t already have an established banking system. This means the best places to invest in the growth and development of this technology will probably be outside the developed world. Many companies already showed a lot of interested in using this database for payments and money transfers. These firms have their headquarters in countries like Mexico, the Philippines, and a few nations in Africa
Indeed, the government in the Philippines has gone a step further and has been pushing for what they call the “e-peso” to be considered an official electronic tender. If you’re interested in how banks will use this database and financial institutions of the future, look into the development of Blockchain in these countries. They could offer great returns on investment if you act now.
2. Application Programming Interfaces
As the technology advances, one major area people expect this database to blossom in is application programming interfaces (APIs). You can design apps using Blockchain’s decentralized system. Indeed, APIs like Chain are already capitalizing on this model.
One can encode new distributed data infrastructure into a wide variety of apps. This opens the doors to new and innovative cryptocurrency transaction features. People will most likely use this technology in many future financial apps. Therefore, be on the lookout for innovations in this field in the coming decades.
3. Using Blockchain in Public Sector
Many public-sector institutions are already using this technology to help increase efficiency and productivity for a cheap cost. Believe it or not, many public schools are using online ledgers to help them keep track of their students. The US Postal Service has also talked about using this decentralized database to reduce its expenditures and become more efficient.
Even a few US representatives and congressmen have been using this ledger to hold their data and to obtain classified briefings. Anyone involved in the public sector should really take a look at how this online ledger could potentially change their work environment in the coming years.
These three areas listed above are great places to study for anyone interested in Blockchain. Still, the possibilities for this technology are truly endless. This technology is about to revolutionize how people around the world think about keeping track of data and recording transactions. It might be hard to imagine a world where this technology becomes commonplace. Still, everyone is preparing for that day right now.
You don’t want this revolution to catch you off guard. So, make sure to at least check out the blockchain Wiki page to educate yourself on the fundamentals of this game-changing technology. Bitcoin may not be here to stay. However, one thing is for sure: this decentralized database will be with us for a very long time.