Before the creation of blockchains, the only way to do transactions between each other was to trust a centralized party like a bank or an auction house to do transactions. The centralized party keeps the records of your account. The security of the central authority can be compromised and our money can be at the risk. Blockchain makes the handling of the data in a decentralized way that means no one controls the transaction in a blockchain. It eliminates the need for middlemen and helps us to reduce transaction costs. In the blockchain, It is not possible to manipulate block data or to have frauds.
Blockchain Technology and Cryptocurrency have also increased the transaction speeds in many cases from days to a few minutes, and it is much faster than transferring money from one bank to another. There are many running projects in blockchain technology and they have their own native token or digital assets to regulate the transactions within their community. You can discover the top cryptocurrencies by market capitalization on coinmarketcap website.
What is Blockchain? What is Cryptocurrency?
Blockchain is a kind of database and stores data in blocks that are then chained together by hash cryptography. Data blocks are chained together in chronological order. This means when new data comes into the blockchain, that data is entered into a fresh block. Now, when the block gets filled with data, then that new block is chained onto the previous block of the blockchain. Every block in the blockchain is connected in a chain and each block has the information of its neighbor blocks in the chain. Hence if data is modified in one of the blocks of the blockchain, then the other blocks in the blockchain will know the tempering of the data. Hence, data in the blockchain is Secured.
Blockchains are decentralized because no one has control over the data in the blockchain. There is no centralized third party controlling the blockchain and its transactions, and there is no centralized management. This means all users of the blockchain collectively retain control. Blockchain technology may decentralize the world in the future. Data entered in the blockchain is immutable or irreversible. So, transactions are permanently recorded in the blockchain and no one can alter them. Blockchain agreement is governed by the smart contract of the chain and no one controls and regulates it.
Why Do We Need Blockchain?
In the current financial systems, all our transactions are governed by some central authorities. Our money is not secure and we need to give huge transaction costs for transferring the money. There are land disputes due to improper documentation of the property. Artists are not getting the value of their art. i.e musicians don’t have control over their art. Decentralize finances (DeFi) is the solution to centralized finance and NFTs are to solve the Copywrite issues of the arts of the artists.
Blockchain is the solution for all the centralization issues because blockchain is completely decentralized and no one has control over the data in the blocks of the blockchain. So, no central authority can have control over the data in the blockchain. So, the two parties can transact in a trustless or seamless way through smart contracts on a blockchain. Artists can create NFTs or Non-Fungible Tokens for their arts which will protect their copyright. The owner of the NFT of a particular art will be the owner of that art. For example, particular music audio can have its own token or NFT and the owner of that NFT will own the copyright of that music Audio. This will help all the great artist to have control over their arts and their originality. No one shall have control over the art of others.
Blockchain can be accessed from any part of the world. So the international transaction can be much quicker than the current financial transactions through banks. Some transactions via banks can take up to 10 days to transfer the money from one country to another. While cryptocurrencies can be transferred within seconds.
In the future, it may be possible that a piece of land can be mapped with its own digital token or NFT. The owner of the token will be considered the owner of the piece of land. This will remove the delay in buying and selling properties and giving huge transaction and brokerage costs. Also, the chances of fraud are high during the property deal. Blockchain technology or cryptocurrency can remove these issues by tokenizing the properties. Instead of selling the original property, the property owner may sell the token of that property. So, the owner of the token will be the owner of the land or property with the help of smart contracts in the blockchain.
This will make the transaction secure and faster. For example, buying land can be as fast as buying cryptocurrencies. Just buy the digital token of the land and you may own the land. But this transition may take time because ownership should be mapped in the token and this will require a huge amount of work for the government. But technology is booming and can definitely change the future. We hope to see a decentralized world in the future. Cryptocurrency has many real-world applications and can be used for multiple purposes. In the future, we may see different use cases of blockchain technology or cryptocurrency. Blockchain is here to stay and definitely has the potential to change the world.
That is all about blockchain and its importance in this post. For any queries, suggestions, and feedback, you can contact us. You can also discuss your ideas via comment sections.
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