In 2008, a cryptographer named Satoshi Nakamoto—a name used by the unknown person or persons—invented Bitcoin. It is a digital currency that enables people to conduct peer-to-peer transactions without the help of any third party such as banks.
Whenever we do any transactions, it happens through a third party such as a bank and regulatory laws, but in the blockchain schema, these transactions happen securely but anonymously without the involvement of any intermediaries.
So you might ask how the current transactions are happening online with debit and credit cards? Current transactions happen through electronic intermediaries where we depend a lot on the third parties for trust and fraud detection. More complexity in the transaction requires more mediators. Every step here adds cost and takes a lot of time. However, blockchain technology has an advantage of reducing the cost involved in transactions.
How Does Blockchain Technology Work?
Here is a simple example. A wants to send money to B. A initiates the process, and in blockchain terminology, this transaction is represented online as a block. The block is then broadcast to every entity involved in the network for authenticity and approval. The entities approve if the transaction is valid. The block will then be added to the chain which provides a permanent and transparent record like a ledger of transactions and the money moves to B. In this process there is no physical currency involved but just the acknowledgment of the change of ownership.
Potential Applications of Blockchain Technology
- Fund transfers
- Settling trades
- Voting and much more
Benefits of Blockchain Technology
- Increase in transparency
- Accurate tracking
- Permanent ledger
- Cost reduction
Blockchain Technology Facts That Need Clarity
- Complex technology involved
- Regulatory implications
- Implementation challenges
The whole world is going gaga over this technology, and this is going to be the next big thing in the online space. We can expect transactions to become smoother and ultimately help a lot of freelancers working in different geographic locations. The blockchain technology is also a boon for companies that employ freelancers since not many regulations and laws are involved. There will be less friction between parties. There will also be massive increases in productivity.Opinions expressed here by Contributors are their own.