Technology in the contemporary world is transforming the way businesses used to perform. There are innovative and novel ideas being introduced into businesses. The blockchain is also one of those ideas that have recently evolved and have already turned into an established industry. With the ever-increasing reach of the internet and fast-growing demand of cryptocurrency; many companies are aiming at facilitating their clients by incorporating blockchain system into their business.
What is Blockchain?
Many people cannot clearly distinguish between the ideas of cryptocurrency and blockchain. They hold a belief that the two are exactly the same thing, however, on the basis of the function of both concepts, it can be seen that the two fall into two different categories. Cryptocurrency, or better known for its unit Bitcoin, is a decentralized digital currency, while Blockchain is a technique that enables the transaction of this decentralized currency. The blockchain is a system which provides public ledger to record each and every transaction made with cryptocurrency. The blockchain is much bigger a concept than just digital money. According to Donald Maclean “Blockchain is to Bitcoin what internet is to email.” This is enough to explain how wide the canvas of blockchain is.
How Does the Blockchain Work and How is it Different from Conventional Banking?
From the beginning of times, in order to keep track of their financial activity, people tend to have recorded all the transactions that ever took place. A similar system was introduced through blockchain technique to keep all the cryptocurrency’s transactions transparent and free from fraud. Cryptocurrency is another name for decentralized digital currency whereas blockchain is a system that records the activity of its transactions. The record of exchange of money contractual is put into a blockchain and each block in the chain contains huge data in a properly programmed form. These blocks are interconnected by a network and store the data of transactions through cryptography. The transfer of money from one place to another is delicate information, anybody using a computer could hack that information and change it, however blockchain makes this information so composite and well distributed into segments that tampering of the data becomes almost impossible. Even if a person hacks one of the blocks, the other blocks in the network remain intact and no information is fully revealed.
Blockchain is different from how banks work, for instance, if a person wants to transfer funds to another person, the supply of money between two participants require an intermediary to do the job. Therefore, he uses banks, dealers or government as channels for the transfer of his transactions. These intermediaries when provide services, also keep their share in the form of interest or extra charges. This costs senders extra money than the actual amount he intended to send. Blockchain on the other hand functions as a synchronized system, a hyper ledger, it acts like a middleman which enables the money transfer activity between two parties and keep track of it in blocks. This is a cost free and decentralized system which has no intervention of government or any other authority in it.
What is the significance of Blockchain.
According to financial and systems analyst, blockchain is going to be a phenomenon larger than the internet. It is going to revolutionize the way world economy moves and operates. Blockchain is one of the most transparent and fair systems of crypto-money’s transfer. This is the most secure system which guarantees the safety of all kinds of data stored in it. It is a very simple but reliable database technique which promises safe exchange of money.
Companies in the older years used to rely on banks for their transactions and account whereas, in today’s world, they can keep money in cryptocurrency and use blockchain to regulate transfers and exchange of money. This method can also save companies from going bankrupt because of their investments into banks. If the financial bubble of a bank bursts, the investor or account holder inevitably loses his money too. This system can easily be relied on by the companies to save them from going bankrupt. The blockchain is the fairest system that reduces companies’ vulnerability to fraud and miscalculations.
This helps corporations and companies to enjoy great privileges like avoid tax payment and keep track of all the monetary activity with least interference from others.
Blockchain works on a decentralized system and does not depend on any intermediaries to conduct operations between two parties. Whenever two parties are forming a contract, the one playing the role of a middleman charges extra money from both the parties involved. With smart contracts, you do not need middle forces, rather you can directly send money to the other party in the contract.
A smart contract is a system that stores in it rules for a contract. After the negotiations of a contract are over, the recorded terms automatically come into effect. Blockchain, when paired with smart contracts technology, ends the need to rely on a central system between transacting parties. All data of the smart contract is saved in the blockchain and is available to public.
How companies are going to incorporate blockchain into their business.
Any company that considers facilitating its clients, its prime agenda, never hesitates from introducing new and innovative ideas into the business. Blockchain in the contemporary world is proving to be a game changer. The technology is widely used in many business areas like those of insurance, payment, banks and exchange companies. Big names such as Microsoft, Dell, WordPress are also using blockchain and cryptocurrency in their businesses. In the payment industry, since everything mainly deals with money, it is extremely important to keep a record of all the finances and transactions taking place in it. Companies like Paypal and Skrill that provide online payment options to its customers are switching their systems to blockchain. It keeps the machinery transparent and accessible to public, the data can be reached and read by any person who intends to know it. Since blockchain works on a decentralized system, Banking and Insurance companies use it to let their businesses go beyond borders. There are no geographical limits that become an obstacle in the way of these companies’ receiving business and making international clients. In the current times when the world is undergoing all sorts of turbulence from political to financial, companies look for options that can minimize the chances of them getting caught up in a fraudulent deal. Blockchain provides these companies with the luxury of relaxing and letting the system take care of all records. The system where keeps all the data accessible to the public, it also completely eliminates the chances of hackers altering company’s classified information or forging any of it. Anyone who wants to read or access it, has it under its reach but the information cannot be changed by any means as it’s so well distributed and devolved into a chain of millions of blocks.
Some of the major companies that are using cryptocurrency for their payments and deliveries are also using blockchain to keep their money exchange crystal clear. It works on a decentralized system, which keeps any business free from the intervention of governments and also allows them to invest the money they could be paying into taxes.
With technology growing at an unprecedented pace, there is a new wave of innovative ideas replacing old and cliched concepts. The world in the wake of similar events and in times as volatile as today’s, looking for options that provide both businessmen and clients with safest business solutions to rely on. Blockchain with its efficient system gives this leisure to its users. It’s been used by banking, insurance, exchange and many other companies that keep each of their money transaction transparent. It is going to be a new game changer in the world.