Over the past few years, the internet has made the transaction of money quite easy; online purchases and the trading of securities can be conveniently done. But the transferring of financial assets via antiquated systems can take a substantial amount of time, as these systems are slow and expensive. So to ease out this problem blockchain is being used, it is the latest and the transparent way of storing data. Blockchain helps in solving the problem of slow transfer of assets and it completely reconstructs the fundamentals of monetary transactions and also introduces new ways of digitalized transactions.
Where is blockchain being used?
As mentioned earlier blockchain is the new way of storing data. There are a number of blockchains the in the world like the one for Bitcoin and there are also blockchains created for specific companies or communities.
The users use blockchain to store all the data and it is updated from time to time, this way even if one copy gets damaged then there is always a backup copy available. Presently the blockchain technology is being in the banking sector, a few examples of this are:
- US federal: It uses the blockchain for developing a digital cash system.
- Citigroup: The blockchain and well as their own currency known as the citicoin are used for implementing the ledger technology.
- Deutsche bank: Blockchain is used for the settling of currency, for trade processing for derivative contracts.
Types of blockchains
This is a platform which is decentralized and one is free to read as well as make any transactions, those transactions that are valid are entered into the ledger. In a public blockchain, anyone who has access to the internet can send transactions. Bitcoin is known to be the largest public blockchain.
Steemit is an example of a public blockchain; it is a social networking website which uses the steem blockchain, which means that it builds social interaction by giving Cryptocurrency rewards. Steem is like liquid currency used by Steemit for community building, it can be bought as well as sold or transferred to the users. To be precise Steemit is a blockchain that is designed to make web content tokenized. You can know more about this site by visiting its official page steemit.com/, here you can know about the steem tokens that are distributed by this site to its creators as daily rewards.
This kind of a blockchain is permission-based, means that one can only join it with the permission of the administrators. This kind of a blockchain is great for companies that are keen on using blockchain technology; these companies use blockchain for accounting as well as record-keeping, with full autonomy.
This is a semi-decentralized blockchain which also requires permission but only a single organization controls it.
Benefits of using Blockchain technology
Blockchain technology is being widely used by public networks and private networks because it is considered to be invaluable as compared to other encrypted databases, which do not give the discretion of making changes in the ledger. Here are some of the invaluable benefits of using blockchain technology:
- Trustworthy: Blockchain technology is considered to be trustworthy as it allows users to make transactions and also verify them without any kind of involvement. No involvement of any kind by a third party means that there is less risk of any kind of unauthorized involvement and backdoor transaction. It reduces the chances of data tampering and tinkering of any kind of data.
- Transparency: It involves distributed ledger which gives control of all the information to the users. Data involving blockchain technology is accurate as well as consistent. In a public blockchain, changes can be made by all the members, which make this system a transparent system. Moreover, it uses a single ledger record which reduces any kind of complications.
- Fast transactions: Normal physical transactions take a long time in execution, while the interbank ones can take a lot of days for clearance, while blockchain transactions reduce the time for transactions by minutes and can be done within a day. Faster transactions with the help of blockchain technology in a way increase the efficiency and save a lot of money.
- Lower transaction costs: Transaction system that involves blockchain technology reduces the third party involvement and also reduces the overhead costs. Banks use blockchain technology in order to reduce the governance and cost of auditing in order to provide products at a faster pace.
Issues with blockchain
- Complexity: The blockchain technology has a new vocabulary, which makes it a little complex to understand. But blockchain provides glossaries and indexes that help in understanding the difficult terms and makes it easier to understand.
- The size of the network: It requires a large number of users, because if there is not a large network then it becomes difficult to operate and to get full benefits.
- Transaction cost: Each blockchain transaction has a cost which is quite a lot, initially, it was free but now it has become a little expensive to use.
- Error: Blockchain is usually used for data storage but the database should be of a high quality. The data stored needs to be accurately stored as that is what the people trust blindly.
- Security flaw: There is a security flaw in the blockchain, which means that if more than half computers in a network tell a lie then it would become truth. This is the reason why it is closely monitored so that no type of influence can take place.
Blockchain technology is quite efficient and transparent at the same time; it is great for the banking sectors and for private organizations who want to maintain autonomy while keeping the ledger record safe and secure. It can bring great transformation to the different fields of healthcare, entertainment, and manufacturing. However, it does have some disadvantages but they are not that big and harmful if one understands the working of blockchain technology closely and properly.