Everyone seems to be talking about bitcoins and why shouldn’t they? This digital currency with its meteoric rise in value has caused quite a financial frenzy in recent times. Before we get into the debate on whether bitcoin is just hype or the future of money, it is important to shed light on the most impressive technology which underpins these digital currencies – BLOCKCHAIN. Considered as one of the most ingenious inventions, blockchain technology
is expected to rewrite the economic power grid.
What is Blockchain?
As Don and Alex Tapscott present in their book called Blockchain Revolution, blockchain is “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
In the last few decades, we are witnessing the rise of the internet of value and blockchain technology is about to disrupt industries and transform business models. It was during the wake of 2008 global financial crisis, Satoshi Nakamoto, an anonymous person or group released a white paper (Bitcoin: A Peer-to-Peer Electronic Cash System) that led to the launch of a cryptocurrency called Bitcoin. And this seemingly simple act was just a humble start to something revolutionary. Blockchain can be described as a globally distributed ledger that brings everyone to the highest degree of accountability. Unlike traditional databases owned by banks or governing bodies, cryptocurrency transactions are saved in a blockchain and distributed across a large peer-to-peer network (P2P nodes). Decentralizing and distributing the records across a network of personal computers using the highest level of cryptography tackles the critical technical issues of double-spending and makes it impossible to counterfeit transactions or records.
How Does Blockchain Technology Work?
Whenever there is a transaction of digital assets, its details are recorded to a block which comprises a cryptographic hash of the previous block, timestamp of transaction and the transaction data. The newly created block is broadcasted across the P2P nodes for validation. A group of people who work on the bitcoin peer-to-peer network, also known as miners, utilize their computing power to record transactions and check their accuracy by solving complex computational math problems, also called ‘proof of work’. Whenever the miners solve a block, they are rewarded in digital currency. After verification and approval, every transaction is added to the digital ledger as a valid block. All the blocks of transactions are back-linked in chronological order. Since these blocks are chained together and monitored across P2P nodes, tampering of records or corrupting the network seems highly improbable. If one has to hack into the bitcoin blockchain, then he has to hack not only a single block, but all the preceding blocks and then redo the proof-of-work chain on all computers connected across the peer-to-peer network, which is near to impossible. In fact, it is the unstructured simplicity that contributes to the robustness, sustainability and reliability of blockchain technology.
Why Should Your Business Use Cryptocurrency?
Tech giants and fortune 500 companies have been making the biggest strides in blockchain technology. In fact, 2019 witnessed a huge percent of blockchain adoption among enterprises across the globe. A 2020 survey by HSB
reveals that 36% of small-medium businesses in the US accept Bitcoin. Microsoft, JPMorgan, Wells Fargo, De Beers, Burger King, Overstock, AWS, Oracle and Skrill are some of many renowned companies accepting Bitcoin payments now. Cryptocurrency has brought a major transformation in the financial and technological sector by revolutionizing the way we carry out transactions and raise capital. It’s digital, decentralized format makes it a faster and secure alternative to traditional cash systems. Here are some of the major reasons why cryptocurrency is ideal for businesses.
- Save on transaction costs: Unlike the traditional banking system, cryptocurrency transactions are processed through peer to peer networks. You can send or accept crypto currency payments with no fees attached.
- Faster and secure transactions: Cryptocurrency payments are processed much quicker than bank payments. Transactions are cleared within minutes thus facilitating real time instant payments with businesses. Not only this improves the customer service but also helps to manage the organizational finance in an effective way.
- Security: With cryptocurrency and blockchain technology, businesses can have a better peace of mind with security. Since the bitcoins are stored in a digital wallet, the anonymity and security of transactions are always maintained at its best.
- International payments: Cryptocurrencies are not restricted to any international borders or government authorities, thus ensuring easier flow of finances on a global scale.
- Investment opportunities: Blockchain based currencies and systems pose a perfect investment opportunity for businesses. The digital payment market is expected to reach 726 billion by 2020 . Adding cryptocurrency as a payment option for your customers would be a great step to get more market reach and have a positive impact on conversion rates.
Businesses can develop their own cryptocurrency for processing online payments and receiving revenues from multiple digital sources securely.
What Makes Blockchain an Interesting Technology Proposition of Tomorrow?
Blockchain technology works on the principle of decentralization, which eliminates the need of third-party authenticators. Its theoretical immutability, mass collaboration, versatility and clever code hold greater potential to bring changes and make processes smarter. Blockchain technology has been making its way into a lot of industries such as finance, healthcare, law, education, governance and beyond. Anything and everything that can be interpreted in code and of substantial value can be programmed into this digital ledger. And that is why we can say that blockchain technology
is going to stay.