You might have heard of the word “Blockchain”, but most of us are unaware of what this word means and how it can be helpful for our economy. So this article is your guide to learn about Blockchain and its effects on the world’s economy and businesses.
What Is A Blockchain?
For instance, you want to transfer some money from your account to your friend’s account. You will approach your bank for this. As the money is being transferred to your friend’s account the bank registers the transaction details onto its database. These details are thereafter updated on both receiver and sender’s account.
But the problem is, that all these details can be edited or manipulated really easily by the bank. The people who know about all this try to avoid these types of transactions. This problem can be tackled using Blockchain.
Blockchain is just like a spreadsheet that is shared among a network of PCs and every user gets a copy of that. The spreadsheet had all the relevant information of the transaction. This information can be accessed by anyone but no one can edit it.
So basically Blockchain works with blocks instead of rows and columns. A block is a collection of data which is further connected to other blocks in sequential order. This created a chain of blocks that are linked together and the first block is known as the Genesis Block. Blockchain is a “distributed ledger” that is shared over a network and all the users get a complete copy of the ledger.
These some key aspects which proves why Blockchain is more effective than the traditional system of information keeping:
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Peer-to-peer
distribution of information increases the transparency of this system. All the partakers communicate directly with each other, which ensures that no central authority is there to manipulate the data. As the data is spread across the whole network, meddling with data is not possible.
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Cryptographically Securing
the data makes it more secure and tamper-proof.
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Addition Of Data
is the only way Blockchain system work. The data is added in chronological order as well. This implies that once the data block is added to the Blockchain, it is impossible to edit the data.
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Consensus
is one of the most important and useful aspects of this system. This gives the Blockchain the power to update or edit the data via consensus. This is how the power is decentralized as no authority can take control of updating the blocks.
Blockchain has been there since the hype and evolution of bitcoins and the cynical market decided to keep all its effort toward bitcoins rather than the technology behind it. Everyone was trying to explore the endless possibilities that are there with Blockchain in private and public sectors. Several public and private sectors have already started to fully utilize Blockchain’s capabilities. They are trying to incorporate this into their day-to-day tasks as well.
Benefits Of Using Blockchain And How It Can Affect The Economy
There’s an army of offices that maintain our financial records and services, as users we even pay for these services to simplify all these processes. Still, we see how a large number of financial crimes occur every year. This is where Blockchain technology is going to help. With a decentralized ledger that too with several levels of cryptography security, which is available across the network with easy access to all users. This also eliminates the cost of mediators. Real-time verification and recording of transactions including equity, bonds, money and even contracts is a remarkable idea.
The only downside here is the displacement of all these office workers. But this is a cost that is reasonable and fair considers the benefits of using Blockchain.
Getting control of information away from the government is certainly a significant step. Identity thefts and such other incidents would be eliminated as well. In addition, this transparency would make it easier for people to evaluate the effectiveness of charities and taxes. This is a way you can prevent corruption as well. This increased trust would encourage people to help and support those in need.
Blockchain technology would also prevent the possibility of vote-rigging and every gray aspect in the voting process. In some developing countries, we see several news articles about how voters get intimidated or the polling booths get damaged by the government to control the outcome.
A decentralized ledger would enable voters to vote from their homes without any influence. The accuracy and anonymity of the votes will also be preserved. This is an excellent way to end corruption during elections.
Using this technology for banking services would be really helpful. It has been estimated that the banking industry would save around 16-20 billion dollars per year through this. Mediators will be eliminated completely.
Other than the financial sector, Blockchain technology can be helpful with several other sectors as well:
- Supply Chains: This tech would enable the companies and users to track the products right from their original source.
- Energy Sector: This would enable the user to share any excess of energy, this will help in ending the control of energy from utility companies.
- Government: Government sectors are trying to use Blockchain for record-keeping. This will help in tracking all money-related transactions, eliminating corruption whatsoever.
- Music Industry: Using Blockchain would enable the music industry to fight piracy issues. The right people will get paid.
- Healthcare: With the level of transparency that this technology offers, leaking of patient details would be impossible. Medical data saved there can even be used for research purposes as well.
To conclude, blockchain can create a social impact through the use of crypto-currencies. This technology is going to affect the financial sector greatly. This will also prevent issues such as identity theft and financial fraud.
This technology will greatly increase the transparency for all financial processes, which can help in preventing corruption and manipulative governments. As tax-payers we will be able to track where your money went and who is getting the benefit of all this tax money. This will ensure that the government puts our money to good use as well.
These are the ways in which Blockchain technology is going to affect a country’s and the world’s economy.
