With cryptocurrency technology rapidly on the rise, one of the buzzwords you’re bound to keep hearing is “blockchain”, the burgeoning technology that allows for businesses and consumers to execute transactions over a decentralized, peer-to-peer network. And if it continues to grow at its current pace, it could change the scope of finance as we know it.
So, how exactly does blockchain technology work? And why should you enter the blockchain game? Read on for everything you need to know about working with blockchain technology in 2019.
Blockchain: A Brief Overview
The technology associated with blockchain was first introduced nearly 30 years ago for the purpose of timestamping documents, but really took off within the last decade when it was adopted by Bitcoin. Through distributed ledger technology, blockchains allow users to store assets in a series of ledgers, or “blocks” that any authorized parties involved in a transaction can access.
Blocks contain digital tokens, which can be separated into four categories:
- Currency: Digital assets such as Bitcoin and Ethereum that have the same monetary value as flat currency. This eliminates the need for banks and other third parties.
- Utility: Ongoing rights to future goods and services, such as advertising rights or data storage.
- Commodity: Ongoing rights to an underlying commodity, such as oil.
- Security: Rights to profits when a company’s stock rises in value.
The Parts of the Block
A block has three essential components:
- Data: Each block contains information about the value of the digital token and the parties involved in a transaction.
- Hash: This is essentially the block’s fingerprint, the unique code used to identify it.
- Hash of Previous Block: As soon as data inside a block is changed, the hash changes with it. So, each block also lets you know the hash of the previous block in the chain to make changes easy to track.
Starting with the first block, or “the genesis block,” data can be followed in an ongoing chain of blocks that are permanent and can’t be altered once they are entered.
Blockchain Technology: What are the Advantages?
It’s easy to see why blockchain has witnessed such a boom in recent years, as it offers businesses and consumers alike several advantages, such as:
- Makes Currency Universal: You and your international clients can enjoy easy transactions without going through the hassle of converting currency back and forth.
- Speed and Automation: Blockchain’s “smart contracts” feature automates necessary documentation and contract terms needed to execute many business deals and eliminates intermediaries for lightning-fast transactions.
- Beefed up Security: Because a block can’t be tampered with once it’s entered into the chain, transactions are easy to trace, creating more transparency and trust with your clients.
- Perfect for Chromebook: So, what is a Chromebook, you ask? It’s a new third alternative to Mac and PC laptops that, instead of using a hard drive, runs on an operating system designed by Google to optimize cloud storage. Chromebook is already the industry leader in cloud computing, and is perfectly tailored to blockchain activity.
Is There a Downside to Using Blockchain?
The good news about blockchain is that it accelerates transactions by eliminating the need for the bank. But the bad news is, when you get rid of the bank, you also lose the regulatory security banks provide.
In addition, because blockchain is such a new, not to mention complex, technology, the associates you conduct business with might be hesitant to ditch their ole reliable wallets.
The Future of Blockchain
Blockchain’s primary purpose in the here and now is to enable cryptocurrency transactions, but the future for blockchain is bright as well.
In the future, blockchains could conceivably be initiated to track information securely to prevent tampering and other security risks with things like:
- Voting ballets
- Identification cards
- Packages and shipments
- Medical records
- Farm to table food products
- Verifying that products ordered online came from a legitimate manufacturer
- Odometer fraud (i.e. lowering a car’s odometer to try to sell the car for more than it’s actually worth)
- Notarizing documents
Joining the Chain
Sure, blockchain technology is new and can be difficult to grasp. But once you understand how to use blockchain, it could open up countless opportunities for you both in the present and in the future.
What do you think? Is Blockchain Technology going to be the next internet influencing huge masses? Feel free to add your viewpoint in the comments section.