Blockchain Technology. What Is It, How Can It Improve Our Lives and Why Should We Care?August 7, 2020 0 comments
There has been a lot of positive buzz about Blockchain technology and digital currencies in the past decade and for good reason. The technology comes with unique perks that make it more reliable, secure, and versatile than conventional payment methods.
And while that buzz is fully justified, the truth is that Blockchain technology still hasn’t reached its full potential and will continue to grow in the future. Digital currencies and the technology behind them will only get bigger in the coming years and if you still don’t know how they work or how they can improve your life, it’s time to inform yourself.
Who to follow?
When you want to enter the world of cryptocurrency the first thing you should do is to follow the right experts. However, this is easier said than done as the increase of the Blockchain space also means that there are lots of so-called ‘crypto gurus’ with dubious credentials. Needless to say, following these will do more harm than good and should be avoided.
In reality, the Blockchain space is, in fact, lacking professionals. There’s an urgent need for programmers who specialize in Blockchain and smart contracts and it will only get more urgent as the industry expands. This means that the large numbers of ‘crypto advisors’ you see online are only there to increase their exposure.
So how can you tell a good crypto expert from a bad one if you are new to Blockchain? Well, the fact that there are many upstarts in the Blockchain world doesn’t mean that real professionals don’t exist. On the contrary, they are out there and are willing to share their knowledge.
Therefore, you should first start by listening to the real experts in the field. These people will keep you up to date with all the latest developments in the industry and will give you sound advice on managing and trading cryptocurrency.
The next thing you should do is get yourself informed about how Blockchain technology works. Learning the ins and outs of cryptos is not a one-day job, but you have to start somewhere. Why not do that here?
What is Blockchain technology?
The Blockchain network is a public database that consists of a ‘chain of blocks’. These blocks are the digital information that users share. For example, if you buy something with Bitcoin, all information regarding the purchase (time, date, amount, and digital signature) is shared between all users on the network.
The next thing that happens is verification of the crypto transaction. This is where the differences between conventional payment methods and cryptocurrency are most apparent.
If you are buying something online using a debit card, for instance, your transaction is first processed by your bank and only then goes through. That’s not the case with Bitcoin.
In the crypto ecosystem, the shared Blockchain has the role of verifying your purchase and not some other entity outside the ecosystem. This is why when people talk about cryptocurrencies they say that they are decentralized. There is no third party in the form of a central processing authority involved in crypto transactions.
Once a transaction is verified, it gets a unique identifying code in the form of a hash. Your transaction block gets its own hash, which is connected to the preceding block. This is done for security reasons too as the double-hashing process means it won’t be worthwhile for a hacker to try and change your transaction.
After a block is stored in the ‘chain’, all users get an updated copy of the Blockchain with the new information which also includes your transaction. You may have heard people speaking of the Blockchain as a distributed ledger and this is the reason why.
Every node in the network must have an identical Blockchain copy which is updated when a transaction is broadcasted. Hence the name distributed ledger.
Governments are turning to Blockchain too
Countries such as China, Japan, Malta, Estonia, and Singapore are already using Blockchain technology to make a lot of their services more efficient and easier to access.
For instance, when Estonia wanted to secure health data of its residents it chose Blockchain technology. Similarly, Malta opened its doors to various cryptocurrencies by introducing a regulatory framework for cryptocurrencies as early as 2018.
However, if you are looking for the world leader when it comes to incorporating cryptocurrency and Blockchain technology, you should look no further than China. The Asian country has thousands of Blockchain startups and it is heavily involved in most of them.
More importantly, though, the Chinese government is currently dedicated to turning their crypto e-RMB project into a fully functional payment method as soon as possible. e-RMB stands for digital renminbi and China plans to use the cryptocurrency together with its national currency in the near future. When that happens, the digital renminbi will be pegged to the Chinese national currency and both will be used simultaneously.
China has lots of reasons to turn to a digital currency. Chief among these is the protection the country would get if sanctions are once again placed on its economy.
The Chinese want to reduce the impact of future sanctions and threats on both the country and its companies. A cryptocurrency will offset the effects of sanctions imposed on both and will offer long-term stability to China’s economy.
The Chinese are so committed to digitalizing their country because Blockchain-based technologies are perfect when it comes to managing crises too. For instance, China used Blockchain technology to battle Covid-19 and is lauded as one of the countries that dealt the best with the novel coronavirus.
Companies that accept Bitcoin
It’s not only countries and governments that are transitioning to Bitcoin and other cryptocurrencies. A lot of companies are following the same trend and are catching the crypto-wave too.
Some of them are trying to stay ahead of the curve and are even trying to develop their own cryptocurrencies. Facebook, for instance, has announced the Libra cryptocurrency in 2019, released its experimental code, and promised to ‘put it in circulation’ by the end of 2020.
However, developing your own currency is quite difficult. What is more, most companies don’t need to have a cryptocurrency of their own. That’s why the majority of companies are adopting existing cryptocurrencies such as Bitcoin these days.
PayPal, for example, accepts Bitcoin and facilitates payments via processors such as GoCoin, Coinbase, and BitPay. The popular e-Wallet was one of the first companies to announce that it would accept Bitcoin back in 2014.
These days PayPal once again seems to be pushing the crypto-boundaries. If insiders are to be believed, the company is thinking about offering direct sales of cryptocurrency to PayPal users pretty soon too.
Shopify is another popular online platform that is open to Bitcoin. They have been accepting the cryptocurrency since 2013 and also allow their users to set up their shops and use Bitcoin as a payment method.
Similarly, Rakuten, referred by many as the Japanese version of Amazon has also started accepting Bitcoin, Ethereum and Bitcoin Cash. The online retailer also went a little further and even launched a cryptocurrency Rakuten Wallet.
Lastly, Microsoft, one of the biggest tech companies in the world, also accepts Bitcoin. In fact, it has been doing that ever since 2014 and you can purchase most of its products using the cryptocurrency. This means that the cryptocurrency can now buy you top Microsoft games, apps, as well as operating system and software licenses.
Featured image credit: Pixabay