Two Sides to the Same Coin: The Perspectives of Blockchain
What if you have an institution that needs access to resources ASAP? But, you don’t want to go through the hassle of searching for them and endless hours of paperwork. In simple terms, you do not want a middleman. Blockchain can potentially be the solution to your problem.
Depths of Blockchain
Terminology
- Blockchain is a decentralized network that acts as a digital record for transactions.
- Nodes are all users on the network.
- The block holds the transaction(s).
- The hash is a particular code for each block.
- The chain is where the organization of the blocks is created.
- A private key is a specific form of cryptography, in which, grants the users access to her/his funds.
The Process
How does this actually work?
When a transaction is made in the network, the details, including the agreement of both users, are kept in a record. Then that record is verified by nodes and, if accepted, the record gets placed in a Block, along with other records. Each block has its own hash and the hash before it. Finally, the Block is added to the blockchain, in which, the hashes configure the blocks together in a particular form. And the transaction goes through. The only way to edit a block is if, one, you own it, and two, you have a private key. This process goes on in public blockchains. As for private blockchains, it is invite-only and the host controls the network.
Ups and Downs of Blockchain
For one thing, it’s pretty organized. All transaction records are kept within the network. But while some may think there is absolutely no corruption, there is a chance of it happening. McKinsey&Company explained that the security aspect depends on “adjacent applications”, and they have been invaded before. Secondly, trust is a key factor that the network appears to have obtained. And Deloitee.com’s statistics agree. They ran a study in 2020 which resulted in 55% of organizations seeing Blockchain as a high priority. Then again, don’t put all your eggs in one basket, at least in terms of cryptocurrency. Academy.binance.com pointed out that if users, who received a private key to get access to any earnings, were to lose that key, then their funds are lost for good. So, it's always good to have a backup plan.
The Industry
Despite the pros and cons, Blockchain is still on the rise. According to a PWC report, 84% of companies are active participants in the blockchain. An additional 32% of companies are in the development stage, as of May 2020. Furthermore, Fortunly mentioned that more than 20 countries have some interest in cryptocurrency. If that didn’t prove my claim, spendmenot.com posted that worldwide spending on blockchain solutions has an expectancy of 11.7 billion dollars by 2022.
Now, let's take a look at the few sectors Blockchain has been disrupting.
Cryptocurrencies
When discussing Blockchain, Bitcoin seems to be the favorite example. Founded by Satoshi Nakamoto, Bitcoin is an open-sourced, Peer to Peer (P2P) network in the Blockchain. This means that everyone on Bitcoin has equal privileges and restrictions and that all ‘movement’ is visible to all participants. Like I mentioned before, Bitcoin is great for trading because there is no middle man. But, just like everything else, there are cons to this cryptocurrency. Cryptonews says that one downside of Bitcoin is that there is little regulation and only some security when it comes to the users. Ethereum, another cryptocurrency, seems to have a working system to deal with that.
Ethereum is also in the lead with Bitcoin. While Ethereum uses similar fundamentals to this company, there is a difference. Innovation. Ethereum is more than a cryptocurrency, businesses can leverage it to create new programs, as blockapps.net explains. Companies such as JPMorgan Chase are using the Ethereum network.
Hungry for Streamlining
According to CBInsights, researchers are searching for ways to design a transparent structure for capital markets. For example, developing services such as using Distributive Ledger Technology to prove ownership of securities, would contribute to this idea. Research done by builtin says that NASDAQ has been using Linq, supported by blockchain, for their trade settlements. This sped up the entire process of settling trades from days to minutes.
Government’s Take on Blockchain
Speaking in terms of Blockchain, governments are the middleman when it comes to pretty much everything. In this case, it’s a negative for cryptocurrencies. Investopedia states that “All of this control is lost when non-government bodies create their own currencies.” Two Government tasks are at risk with cryptocurrency. One of them is to regulate the flow of paper money, and the other is to collect taxes. So when a type of hard-to-trace currency comes into play, it’s virtually impossible to hold people accountable.
Lawful Use Case
Besides the government disliking cryptocurrencies, they wouldn’t mind leveraging the general blockchain for some benefits. Due to how open it is, leaders are in hopes that it can prevent election fraud. One example that GCN.com had was a startup called Voatz, which claims to specialize in securing the voting process with an “immutable blockchain”. In 2018, this application collaborated with regions in West Virginia to grant access to military members to cast absentee ballots through Voatz during the state’s primary elections. The app is compatible with phones and tablets, which is great for people in rural areas and immobile citizens.
Given the above and many other reports, Blockchain may have a chance to innovate the way we digitalize data. So what will that mean for you?
