Blockchain, Crypto and the Future of Payment Systems
Blockchain, Crypto and the Future of Payment Systems
You may have heard the term blockchain technology before but aren’t quite sure what it means. We will deepdive to the realm of future finance and get a grasp of what is blockchain technology and how it works.
You may have heard the term blockchain technology thrown around before but aren’t quite sure what it means or what it all encompasses. You’ve come to the right place to learn more so you can further consider if your business would like to adopt it.
It’s important since essentially all businesses run on information. You need to not only obtain it quickly but it needs to be accurate as well. Blockchain technology may be the solution you need to ensure that the information you transmit is immediate, shared, transparent, and most importantly, secure and only seen by the intended party. Here you can learn more about what is blockchain technology and how does it work, as well as review the many advantages of using it.
What is Blockchain Technology?
Blockchain is a ledger that helps record transactions and track assets in a business network.
The assets can be tangible (cash or land) or intangible (patents, intellectual property). Using a blockchain network, practically anything that’s valuable can be tracked and traded. It not only reduces risk this way but also costs, which is always beneficial.
There are a few key elements of blockchain to know about. They are as follows:
Distributed ledger technology: Duplicated efforts are eliminated as all network participants will have access to the ledger and transactions.
Immutable records: There is no tampering or changing of transactions after it’s recorded. You must create a new transaction if there is an error.
Smart contracts: These are a set of rules that are executed automatically and are stored on the blockchain.
It’s popular since it’s considered a safe and secure means for people to work together and interact without having to involve third parties like banks and the government.
How Does it Work?
Each transaction that is rolled out or created is recorded as a “block” of data. The transactions signal the shift of assets There are a variety of types of information the data block can record such as who, what, where, and how much.
The blocks in a blockchain form a chain, with each block containing data. As an asset shifts or ownership of it shifts hands, it is linked to the previous block and what one immediately after it. There is no altering or inserting of blocks between two existing blocks.
The blockchain is hence irreversible in that transactions are blocked together and every added block strengthens the verification of the one before it. Therefore, it has the strength of immutability and reduces risk since there is no possibility of tampering.
Blockchain is a distributed ledger that can be used to record transactions and track assets in a business network. It’s a ledger of transactions that every member of the network can trust.
Advantages of Blockchain Technology
So, what is the advantage of using blockchain technology? There are several advantages of blockchain that may interest you. For example, record-keeping is often vulnerable to cyberattacks and there may be a duplication of efforts. This is precisely why organisations of all size should invest in a robust critical infrastructure and endpoint security solutions as the primary line of defense against malicious software and bad actors.
Data verification is also slowed when there is limited transparency. Transaction volumes have increased tremendously with the arrival of IoT. Since this can slow business down and negatively impact the bottom line, the better solution that comes into play is blockchain technology.
One of the benefits of blockchain includes that it builds and makes for greater trust. The information is kept within the members of the network and it’s timely and accurate data.
All of the information within the network is confidential. It also provides greater security in that data accuracy is required and no transaction can be deleted. What this then does is create more efficiencies such as that there are no more record reconciliations occurring.
The smart contract, or set of rules, can be executed automatically as well. Generally speaking, blockchains build trust which is what companies want and are always seeking.
The world is shrinking in the sense that people want to buy and ship goods across seas all the time. Payments made and taken across international borders have in the past been slow and expensive.
The transfer process gets complicated when multiple currencies are in play. It means multiple banks and multiple locations need to get involved. One potential of blockchain technology is to make cross-border payments not only faster but cheaper.
When it comes to the past and future of money, it’s one of the most talked about and promising aspects of blockchain technology.
Applications & Uses of Blockchain Technology
There are also several uses and applications of blockchain technology and examples for you to review so you understand more about how it works. For example, it can be used to trace fresh seafood from the moment it is caught or improve digital currency in financial services.
It has also been used and known to transform healthcare outcomes within the blockchain and continues to work toward increasing trust in retailer-supplier relationships. It applies to a wide variety of industries from government and oil and gas to insurance and financial services.
A big area you will see it being used is in business. Its attractive attributes are consensus, replication, immutability, and security. It has the potential to help your business run more efficiently and create new financial models.
It’s all about eliminating duplication of efforts and being able to revolutionise the supply chain. Blockchain technology can ensure safer food, allow you to track every step of the way in shipping, and, most importantly, you can gain and build more trust.
Bitcoins Blockchain Explained
Blockchain technology tends to work particularly well for crypto-currencies. Bitcoin is considered a public blockchain network (or peer-to-peer network) which means anyone can join and participate in it. The downsides are that this means weaker security and no privacy. There are some differences to note when it comes to blockchain and Bitcoin.
Just about every cryptocurrency, including Bitcoin and Ethereum, uses and is secured via blockchain networks. Bitcoin is a digital currency that’s unregulated, and it uses blockchain technology as its transaction ledger.
Crypto is an active and ever growing market that allows people to buy bitcoin, add it to their bitcoin wallet. As well as trade in other currencies using cryptocurrency exchanges.
Anyone using it can ultimately confirm a transaction without a central authority figure clearing it. Some of the most common applications are fund transfers, settling trades, and voting. As far as Ethereum goes, it is an open-source, decentralised blockchain. It does have smart contract functionality and has a more sophisticated construction.
Energy Use of Blockchain
One of the key concerns around Blockchain is to do with its high energy demands. The digital gold rush that has attracted investors to Bitcoin has come with the downside and catch of massive electricity consumption.
It has a large carbon emissions footprint due to its decentralised structure. According to Pre-Sustainability, Bitcoin blockchain alone currently uses 204,5 TWh of electricity per year.
The environmental impact of blockchain and cryptocurrencies is real and there is a problem with blockchains and energy use currently that will need to be addressed. Computers that join the mining aren’t changing the functionality or structure of the blockchain but they do increase its energy. It has been recognised and noted as an issue and there are people working on alternatives that can be considered.
As far as blockchain security goes, there are risk management systems for blockchain networks. It’s essential that you have in place security measures that use a cybersecurity framework when you are building an enterprise blockchain application.
You can reduce risks against fraud and cyberattacks when you apply best practices and assurance services. Each transaction within a blockchain is accurate and correct since all transactions within the blocks are always agreed upon and validated through a consensus mechanism.
Overall, it’s essentially impossible to tamper with, thus protecting sensitive information. There are public and private blockchains. Whereas anyone can join a public blockchain but private blockchains are restricted to business networks and membership is controlled.
However, keep in mind that they aren’t entirely immune to cyber attacks and fraud as there are some cases where they could be susceptible. The three most common and well-known hacks are code exploitation, stolen private keys,public keys, and when an employee’s computer is hacked. There may be phishing attacks, routing attacks, or Sybil attacks that occur.
You must consider the security of the enterprise blockchain application when building it. There needs to be a strategy put in place that covers aspects such as :
Identity and access management
Smart contract security
Consider enlisting assistance from security experts who can help you design a strategy that works and allows you to reach your business goals. Take into consideration what data will be captured in each block and have a disaster recovery plan for the blockchain participants you can turn to in a crisis.
Many are saying and predicting that Bitcoin can move over and that blockchain technology is the future. Not only is the security more enhanced but blockchain technology is a quickly-growing area that companies across many different industries are looking into further and want to adopt.
There is also the potential use of smart contract technology when it comes to practically any field of business using it as part of the contract law process. However, it isn’t going to magically replace doing old-fashioned diligence. There are some aspects of it that need to be worked out first.
Another exciting possibility in which blockchain technology can be useful is in identity management and identity security. It has the potential to transform the way of online identity management in that it has an independent verification process.
It could potentially be used for maintaining voter information within the electoral process or used to efficiently and securely transfer data across different systems and platforms. Furthermore, you may start to see it being used to protect and maintain real estate records and ownership and titles.
Next, there may be some future uses of it within the supply chain. A well-functioning supply chain is vital for many businesses and across many industries. It ensures efficiency and can eliminate some human work that may be complex and make more room for errors. It can be used both in the business and investment worlds and you should definitely keep your eye on it and continue to learn more about it as a business owner.
There are many additional resources out there to help you get a better grasp on it but this should be a good starting point. Keep in mind that while blockchain technology is considered secure, you do need to have a cybersecurity plan in place as you adopt and implement this at your workplace. Blockchain for business has many potentials and it’s worth considering it as a solution if you’re looking to increase efficiency. Overall, it has the potential to transform your business and help you find greater success.
For more information about crypto, blockchain and payment system please watch Speaker Agengy’s YouTube channel videos.
Video of our global speaker Mustafa Icil on the subject: