Blockchain technology is on everyone’s lips, not only because of the cryptocurrencies, but its actual effects are only recognized by very few. With this blog article, I want to shed light on the cryptographic darkness. But don’t worry, you don’t have to be a mathematician or cryptographer to follow the instructions. Only the everyday aspects of blockchain technology are highlighted in this article.
Blockchain technology and its effects
The topic of blockchain and cryptocurrencies adorns several cover pages of many magazines, but readers and editors are often only interested in making money quickly and easily. However, if the blockchain is reduced to this one aspect, it is massively underestimated.
Everyday relevance is the key to a massive spread and increasing integration of the blockchain into our everyday lives. The crucial question is which aspects will enrich it sustainably in our lives. To understand this, the mathematical-logical foundations are not necessary. It’s like a computer: you don’t have to understand how it works in detail to be able to operate with it. So we focus on the benefits and impacts that blockchain technology can and will potentially have on our lives.
Blockchain is at least making major changes in our business
The blockchain has an enormously high level of security. At least if we consider today’s technological framework. With current technology, it cannot be “hacked”.
You can assume that this has been attempted with the cryptocurrency Bitcoin. The main reason for this is the decentralized data comparison, which is carried out by the entire community. Since 2010 it has not been possible to change the blocks in such a way that the theft of the coins has been made possible. A transaction in this system is compared, approved, written down and just saved in data blocks by the community. But not only that – these data blocks are in turn connected to other data blocks, which increases the complexity enormously. The more complexity there is, the more difficult it is to attack the system.
Technology ensures transparency and security
Let’s take a look at how a traditional money transaction works from one account at one bank to another account at another bank. Who needs to know that you have an account with a bank? Well, basically just you and the bank in question. Other customers of the same bank know nothing about your business relationship with the bank. It would also seem a little strange if suddenly all bank customers were told that you now have an account with the bank. But this is exactly what happens in the blockchain. Potentially every participant has insight into the transfers that take place within the blockchain.
However, if nobody knows that you have an account with a large amount of money with a bank, how do you intend to prove this if something happens to this bank? Phishing emails, for example, switch exactly between you and the bank in order to get sensitive data. In the worst case, these can then be used to make transfers that you do not know about. You see, confidentiality and privacy can also mean immense disadvantages.
Blockchain technology combines transparency and anonymity
The blockchain shines through its absolute transparency, since it logs and makes every transaction transparent. Nevertheless, the law of anonymity also prevails, since only so-called “public keys” are published. The community does not see names, but only a certain sequence of numbers, which in turn represent “accounts”.
This ensures transparency and anonymity at the same time. The community is now in the millions, so that a hacker would have to change millions of accounts and transactions at the same time in order to change the original transaction. It is not possible to change millions of entries at the same time with the currently available technology.
The majority principle also applies to blockchain. If 51% of the participants confirm that the transaction is correct and, for example, not a double booking, then it will also be recorded in the blockchain. If the entry was anchored in the blockchain, it cannot be changed afterwards.
Blockchain technology is strong, sometimes people are not
Nevertheless, there are weaknesses in this system, namely the people themselves. Perhaps you have already read about coins being stolen or lost. However, this is not due to technology, but solely to the people who use this technology. After all, with your “private key” you are the only person in the world to have access to your wealth. If this key is lost, your assets will also be lost. However, blockchain technology is not alone with this problem because it can also happen to you with your credit or bank card.
The blockchain ensures a new level of speed
Another advantage concerns the speed at which transactions can be carried out within the blockchain. Due to the size of the community, one could conclude that the confirmation and registration of any transaction would take a long time. However, this is not the case. Even in times of “network congestion”, for example in December 2017, the confirmation and writing of the transaction took a maximum of 16 hours. Ideally, it lasts 30 minutes or less. The community is constantly working to speed up these processes, so we can assume that the transfer speed will continue to increase. The comparison makes us certain. Have you ever transferred money from Europe to Asia? This process can take several days.
The blockchain does not care where you are on the globe and which country the transfer should go to. It knows no national borders. The only thing that is necessary is a usable internet connection.
The blockchain is good and cheap
If a technology is to be used more, the costs and fees have to be kept in mind, which otherwise it will not prevail. Sure, there are always so-called “early adopters” who are willing to pay more to promote the technology, but for the mass market, the costs have to be comparable. The nice thing about blockchain: the larger the community gets over time, the cheaper the transaction fees, which are already extremely cheap. Finally, no bank charges or the like are to be paid.
My conclusion as an entrepreneur and IT expert
The new approaches and philosophies that this technology enables create completely new starting points in the areas of security, speed and cost efficiency. We will most likely only use a small fraction of the possibilities that this technology offers. Due to these advantages and the corresponding further development, it will sooner or later prevail in the masses. Soon it will be completely normal to pay with Bitcoin and other cryptocurrencies in the store or online shop of your trust.
From an entrepreneurial point of view, it is very advisable to observe in which areas data transmission is necessary and how this can be solved with the applications of the blockchain. Perhaps you have already discovered one or two areas of application for this when reading this article. I wish you every success!