Centralized systems have treated us well for many years, but if we see the vulnerabilities: money and data is stored in one spot, this makes easy target for malicious activity. What if central banks shut downs or goes through software upgrade for whatever reason? It may halt the entire system and nobody will be able to access the information it possesses. Companies are starting to work with Blockchain technology; some of them are using it in the financial sector while others are trying to improve their bureaucratic systems.
Countries like Singapore, China, Canada, etc. are trying to offer a national digital currency based on Blockchain technology and supporting the initiative. The intention is to provide decentralized solution and distributed ledger technology for financial market infrastructures. Although this does not mean that these countries will opt for full-fledged Blockchain, further analysis of the safety and efficiency of this technology is needed.
One of the most interesting and misunderstood concepts in Blockchain technology is transparency, some say it gives you privacy while according to few it is transparent. However, this leads to some doubt about how privacy and transparency can effectively simultaneously exist. In this article we will try to clear how Blockchain balances the two concepts.
The identity of a user is concealed behind powerful cryptography (encrypting and decrypting), meaning that linking public addresses to private users is difficult to achieve. Transparency of Blockchain comes from the fact that the holdings and transactions of each public address are open for viewing. It is possible through Explorer, an online block chain browser which displays the content of individual Bitcoin blocks, transactions and balances of addresses.
Cryptocurrency and Blockchain are still relatively new technology; companies are likely to pick up the right Blockchain technology for the business. Blockchain companies: Steem is like YouTube on Blockchain and has attracted over 920,000 users who publish more than 1.5 million posts each month. Steem has also paid over $40 million in its digital asset via (cryptocurrency rewards) to content creators. Ripple, Intellectsoft, and Celsius Network, are some of the companies today, assured for success and will be popular soon.
With the emergence of cryptocurrencies like Bitcoin, Blockchain technology is disrupting almost all markets, changing the way we do our day to day business. Bitcoins are digital coins you can send through the internet, its software is completely open source and you can trade your currency exchanges with dollars, euros and more. It’s very much still an experimental currency and a high risk for consumers and investors, but the Bitcoin design has been the inspiration for various other applications.
Effectiveness of Blockchain technology in the following areas in future:
Smart Contracts– The most critical area where Blockchain helps is to guarantee the validity of a transaction through secure validation mechanism. Contract is where consent of the parties is involved to agree and interact with each other. Industries and institutions are heavily reliant on contracts, such as insurance, financial institutions, real estate, construction, entertainment and law. It can formalize the relationships between people, institutions and the assets they have control over. They eliminate the need for trusted third parties and are self-verifying, self-executing and Tamper resistant.
A smart contract is like a cryptographic box that contains value and only unlocks if certain conditions are met. Once involved authorities and companies are on a Blockchain, a smart contract could be used to define the rules of a valid deal.
Supply chain management- A Blockchain is a digitalized, decentralized and incorruptible public ledger that can transform supply chains, industries and ecosystems. The following applications are now in use or can be implemented in supply chain using Blockchain technology:
Automotive supplier payments– It is exciting to see cryptocurrency in the automotive industry. There are also suppliers and websites available for buying and selling cars with Bitcoin, which allows transfer of funds anywhere in the world without the need for traditional banking transactions, as transactions are generally made directly between payer and payee. It is also secure and rapid, transfers also incur lower fees. However, buying a car from a random individual is considered a bit risky.
Food Traceability- Satoshi Nakamoto, inventor of Blockchain technology aimed in creating decentralized ledger leaving behind open source software that the users would be able to update and improve. Companies can use distributed ledger systems to record product status at each stage of production. As the records are permanent and immutable, they make it possible to trace each product to its source.
Food volumes such as coffee, tea, oils, sugar and beans are almost impossible to track. Blockchain technology enables the tracking of food packages, by a unique identifier such as barcode, QR code or RFID transmitter. The benefit from using Blockchain is that no central party needs to be trusted in order to overlook the data, while still allowing volumes to be transparent for everyone in the chain. An area of concern within the food industry is that many food products are small and inexpensive; there is a risk that tracking of every package and seed can become expensive. Blockchain enables integration of simple hardware and cheap software and is ideally suited for managing the process.
Supply chains have already started using Blockchain in some areas of their operations like electric power micro grids and cold chain monitoring. However, transformation of supply chains will not happen overnight, new doors may open to faster more intelligent and more secure process throughout the entire supply chain.
Criticisms and challenges:
Huge electricity required– Remember all the power required to verify transactions demand electricity. In order to unleash the power of Blockchain technology, computer scientists need to solve this big problem.
Security about the private key– Private Key must remain secret at all times because revealing it to the third parties is same as giving them controls over Bitcoins secured by that key. Also the key must be backed up and protected from accidental loss, because if it is lost it cannot be recovered and the funds secured by it are forever lost, too.
Extremely volatile– Decentralized Blockchain technology and virtual currencies are extremely new to the market. Fluctuating prices of Bitcoin vary from day to day because companies, investors, and governments adopting or not adopting them greatly affect the volatility.
Conclusion: Blockchain will be an important part of our financial and technological digital future. It is one of the incredibly creative inventions that technology has ever seen. So how we use it is up to us. Some companies such as Overstock.com and Tesla have already started accepting virtual currencies. However, it is still not apparent what the retail leaders like Amazon and eBay would do with the cryptocurrency acceptance. But if they start accepting then it could indeed transform the global scenario.