Blockchain is the latest buzzword with almost all the Fintech people and enthusiast talking about its potential globally. The technology, originally devised for the digital currency, Bitcoin, is gaining a lot of popularity and traction. It was invented by Satoshi Nakamoto, a secretive internet user in 2008, before it went online in 2009. Several attempts to identify Satoshi have been made without any conclusive proof.
According to blockchain.info, about 16.5 million of bitcoins have been mined till date with a CAGR of 34% since 2009. The website quotes an aggregate bitcoin transaction of over 200,000 taking place every day, and the number is increasing with each passing minute. In March 2017, the value of a Bitcoin, at US$1,268, exceeded that of an ounce of gold ($1,233) for the first time. And then there is no looking back. Currently, a Bitcoin is valued at over US$4,500. That’s quite impressive!
But what makes Bitcoin and the technology backed by it the preferred choice to perform transactions? Let’s delve more deeply into it to understand this. Every business is based on transactions. These transactions are routed through third-party intermediaries such as banks, brokers, and lawyers. The process to complete a business transaction thus takes a lot of time and is often expensive. Blockchain technology facilitates the process without third-party facilitators in a business network thereby saving time and cutting the cost involved.
Blockchain is a shared, distributed public ledger of records arranged in data blocks interconnected and distributed on multiple computers. The ledger keeps a record of all transactions concluded across the peer-to-peer network. It is run by “miners “whose powerful computers crunch the transactions. The below infographic shows how transactions are carried out in a blockchain setup.
Blockchain can support a wide range of applications in different industries including retail, supply chain and the ones mentioned in the above infographic. Most importantly, the technology has many advantages, a few of which include:
The technology applies a digital signature to create transactions which reduce fraud. Blockchain makes it virtually impossible to remove or change data without being detected by other users.
Today, most of the transactions require approval from a regulatory authority such as banks and the government. In blockchain technology, the verification comes from the consensus of different users.
The distributed and encrypted characteristic of blockchain means that it is difficult to hack by evil intentions. Since all the users have a copy of the blockchain, any tampering made gets alerted
Now that, it excludes third-party intermediaries in transactions, the speed to perform the same automatically improves. Also, this comes with round the clock service and does completely away with the 9 to 5 working hours.
The technology is completely programmable and can trigger actions, events, and payments once the conditions are met.
All these advantages make blockchain an emerging way of making and verifying transaction in businesses, industries, and public organizations. However, as with every new technology, blockchain will have to face a lot of hurdles before it gets widely adopted and graced with open arms by businesses and organizations globally.
Blockchain is still new but its potential is huge. Technology companies which are eyeing to offer “Blockchain-as-a-Service” will make a good ROI if they start early. Major players have already initiated it. According to a World Economic Forum report, 10% of global gross domestic product (GDP) will be stored on blockchain technology by 2027. As we go further, we are likely to see a lot of strategic partnerships that will support blockchain in real-world production and drive the market forward.