Business transactions have seen a tremendous change in the past few decades by the introduction of digital transactions. With a growing need to digitize the way we indulge in information exchange, blockchain technology has paved a way to power our businesses moving forward. The use of this type of advancement has proven to be a replacement of traditional method of transactions. Besides the seemingly rise in the use of bitcoin and blockchain, key industry players appear to be averse in adopting this technology. To understand this, first let’s peek into what is Blockchain, Bitcoin and cryptocurrency is all about.
A revolution which transcended information transaction to sharing.
Imagine the use of google docs to edit your documents. Each person on the sharing network has access to the documents you are using, so that you can edit it in a distributed environment where the information is open to anyone in the network. Similarly think of the files and legal documents to be passed to a group of people. Instead of passing them to each one in person, what if the information of the file is available to everyone over a shared network. This is where blockchain comes into play. It makes the transactions and sharing of information easy without the need of a centralized network. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography.
The first official crypto-graphical chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta. The first distributed blockchain was incorporated by an anonymous person or group known as Satoshi Nakamoto in 2008.
It is an important aspect in which the whole blockchain network operates. Each computer on the network is connected to every other computer having a link to previous system’s information with a focus on sharing the information publicly to everyone. There is no central control over access to information.
Bitcoin is the digital means of any value of a currency. This method of transactions become viable to users as a means of secure sharing of currency over a distributed blockchain network. The market for bitcoin has grown increasingly as it is the secure and encrypted form of transaction available.
Advantages of carrying out a blockchain transaction
- Transparency of information
- Process simplification
- Permissionless (In some cases a private network of blockchain can be formed which allows the user to monitor who have access to the network)
- Fraud minimization
Besides all the positive effects on business, blockchain is still in the works for the following reasons:
The removal of third party verification:
Many businesses have tie-ups with banks and organizations to carryout secure mode of transaction. This step involves verification of information to legalize the source. With blockchain there is no need to invest time in verification as each and everyone in the network is connected to everyone and information is shared. The removal of third party verification methods reduces the share of business for banks, which in turn results in increase of revenue for businesses.
Transaction costs, network speed
As of 2016, the average volume of transaction carried out in a distributed network is about seven transactions per second, which costs about $0.20 and can only store 80 bytes of data.
There is no specified charge for a transaction, as it is considered as ‘near free’, but the rise of bloating which gives miners to reprocess and re-record information on a massive scale. This reduces the speed and authenticity of data being transferred.
Although the content presented to the users is conceptualized by the people, who are in turn naïve users in the network. So there is a huge possibility of misinterpretation of information.
With the rising concerns in security adopting to use of blockchain for your transaction, countries like Russia, China, India and Sweden have banned the use of biotin and blockchain by marking it as a “financial harm”.
Although it has more perks over a traditional mode of transaction, but the means of transferring data using a P2P network is growing. Therefore, while the profits and gains of using blockchain are fruitful, the future potential is huge.