‘Distributed ledger’ technology as the Blockchain technology is commonly known, has been described as a new technology that will change the 21st century. The Blockchain technology has garnered a lot of attention but one reason why it is becoming exceeding popular is its ability to overcome a problem that remained unsolved for years, ‘the Byzantine General’s problem’. Blockchain technology is eliminating the middleman while providing a trusted decentralised exchange and therein lies the true power of blockchain.
Decentralised Technology You can Trust
People began to lose trust in the financial institutions after the Lehman Brothers went bankrupt after the financial crisis in 2008. It was at this time, that an anonymous developer called Nakamoto Satoshi introduced a paper online in October. The paper was titled ‘Bitcoin P2P Electronic Money System’ proposed a concept of Bitcoin for the first time. He explained a system that allows online payment transactions between people who are involved in transactions without any interference from financial organizations. The transaction is recorded by networks which record it chronologically through ‘time-stamping’ function. Transactions information are stored on blocks that can be verified. Computers involved in transactions solve encrypted mathematical formulas and received Bitcoins for enhancing the network security and participating in the blockchain. Blockchain is a type of collective intelligence. Every participant from Bitcoin network can see every transactional information of Bitcoin and unlike the method used on the internet, participants share and store ledgers rather than a server-client method.
Blockchain technology is the fundamental technology of virtual currency and unlike the centralised systems, this decentralised system has advantages in effectiveness, stability, security and transparency. More cryptocurrencies have emerged ever since Satoshi introduced Bitcoin and one of such Cryptocurrency is Ethereum. Ethereum was developed by Russian born, Vitalik Buterin in 2015. In Ethereum, transactions are only performed by inserting Smart transactions as codes utilizing a language called ‘Solidity’ but only after designated conditions are met. A unit of the virtual currency within Ethereum platform is ‘Ether’. While Bitcoin aimed to become the payment method, Ethereum can be used in various businesses and industries as a platform for Smart contracts and transactions.
Blockchain Technology beyond Cryptocurrencies
Individuals, businesses and Governments alike are showing different opinions towards digital currencies and some positive attitudes towards blockchain technologies. Many industries are actively carrying out R&D related to blockchain technologies, while governments are now looking to utilise blockchain technologies as private blockchain, public blockchain, and consortium. For a public blockchain like Bitcoin, the distributed ledgers allow participants to equally share transactional information while a private blockchain like Ripple is only shared to particular participants.
Since Blockchain technology has an interesting aspect to it which is its approach to security, it is unhackable. It eliminates inefficient business processes and provides businesses with the advantage of securing data, reducing errors and replace inefficient accounting and payment networks in the financial industry, repetitive confirmation steps, and delays in processing caused by more traditional practices. Banks and monetary authorities also appear to be exploring the implementation of blockchain to create their own digital currencies. The blockchain technology is disrupting industries and we are hoping to see what next this industry is set to bring to the table.