How Blockchain is changing the face of the future?

  • Posted by:

    Sunil P Thomas

    • December 20, 2016

    How Blockchain is changing the face of the future?

Let me tell you a few predictions that may come true. Or maybe not! Who knows? 

a. A currency will rise, which is not issued by any government, but it will still have global acceptance. 
b. You don’t need the help of a bank to transfer money from one country to another.
c. A platform will emerge, which will make deleting data impossible. 
Think these are plausible? Some of you may say it’s impossible, some would say it's possible, and the smart ones would say these are not even predictions at the first place. 

That’s what Blockchain has done to the world now. There is a global cryptocurrency which is purely peer-to-peer called blockchain, which negates the need for a bank and reduces transaction costs to near-zero levels. It’s not manipulatable either, because it is built on one of the most secure platforms ever known to man, called blockchain. And that same technology is helping us build a non-mutable, non-deletable transaction system, which can be used in any walk of technology. 

So what is blockchain? The blockchain is a pretty simple idea, of distributed ledgers, or transactions that has ever been executed. It’s a chain of blocks that gets added to the existing one, thus making a ledger that starts from the beginning of time and stretches on to all eternity. And yeah, it is a distributed ledger protocol, so editing one node alone will not tamper the system. Thus, a system that remembers every transaction that ever happened through it. Sounds pretty awesome, doesn’t it? 

Now, how does that help? In a lot of ways. Let's look at the financial services sector, primarily banking. For any transaction that doesn’t include physical currency, you need a middleman, mostly a bank or some other 3rd party, like digital wallets. Because of “double-spending”. Double spending is the process of successfully spending the same money more than once. Theoretically, it can’t happen right? So who ensures that double spending doesn’t happen? The Bank. Bank takes the money in your account and gives it to the other account. And in the process they charge a fee too. International transactions take much more time and cost, as multiple banks or clearing houses are involved in the process. And I am not even talking about the cost of currency exchange. 

Now, cryptocurrencies like Bitcoin effectively eliminate the chance of double spending, by verifying each transaction and ensuring that the inputs for the transaction, (money in your account) is not spent already. And how do you do it? You got it right, by reading the earlier blocks of info to see if there was already a “spend transaction” in it. Simple and straight-forward, right? That negates the need for a middleman like a bank. To quote wiki, “Other electronic systems prevent double-spending by having a master authoritative source that follows business rules for authorizing each transaction. Bitcoin uses a decentralized system, where a consensus among nodes following the same protocol is substituted for a central authority.” 

Now how can you use the same technology for other purposes? Read my next blog. (Which I am yet to write, but planning to, anyways.)

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