It keeps on expanding with the increase in the mass in a similar manner blockchain, though might be new to the understanding is experiencing the same phenomenon, which is vast and still expanding. In fact, cryptocurrencies or digital currencies based on blockchain technology are such self-gravitational bodies that are constantly increasing due to their market capitalization.
Linking financial markets with physics, one can say that this market universe contains a vast amount of assets that provide countless opportunities to invest for potential investors. And one such opportunity prominent among Generation Z is investing in cryptocurrencies.
There is a buzz in the world about Cryptocurrencies, and if your idol is Elon Musk, you cannot fathom missing it. But familiarizing it will not be useful if you are not aware of Blockchain technology. Why? Because this is the technology on which the cryptocurrencies are dependent, which ensure that the transactions being carried away are transparent, immutable and accurate.
There is a buzz in the world about Cryptocurrencies, and if your idol is Elon Musk, you cannot fathom missing it. But familiarizing it will not be useful if you are not aware of Blockchain technology. Why? Because this is the technology on which the cryptocurrencies are dependent, which ensure that the transactions being carried away are transparent, immutable and accurate.
In a denuded version, we can imagine blockchain technology as a safehouse for contracts, tasks, payments, or processes that are digitally recorded with a digital code or signature and furthermore are stored in a protected and transparent environment that is free from any deletion tampering or revision. With this, the task of intermediaries, including the brokers, bankers and lawyers, seem to exist, making it cost-effective.
The technology favours the use of machines and algorithms to make free transactions or interactions among individuals or organizations. It is nothing but a revolutionizing technology that is paving its way faster than the Internet. Why revolutionizing? Well, simply because it works on ‘trust’. How? Because it acts as a shared database where there is no single point of failure and no single source of truth, which implies that an individual does not own this technology.
There is no single entity to modify the stored data with a signature. Instead, if any data needs to be added, it can only be done through a mutual agreement among the various nodes of the network. This mechanism is termed distributed consensus.
Blockchain technology is a combination of three important technologies that make it viable. The first is the cryptographic keys, a set of private and public keys to help perform successful transactions between two parties. The second is the peer-to-peer network comprising of a shared ledger with merged digital signatures, and the last is the means of computing that wholly stores the transactions and records of the network.
Blockchain technology is a combination of three important technologies that make it viable. The first is the cryptographic keys, a set of private and public keys to help perform successful transactions between two parties. The second is the peer-to-peer network comprising of a shared ledger with merged digital signatures, and the last is the means of computing that wholly stores the transactions and records of the network.
Blockchain seems like a technology that can transform almost all industries and economies. And what’s more, it is estimated that this technology can, in return, generate a revenue of around USD 3 trillion every year. Even the World Economic Forum has anticipated that by 2025, 10% of the global GDP will be stored in blockchain.
Indeed, the virtual world is helping to minimize stress and is deemed a revolution on its own. Similarly, many claims that blockchain will help redefine companies and economies. Although the enthusiasm is genuine, certain insecurities relate to the hype. First, it’s not just the security like the collapse of one bitcoin exchange in 2014, which concerns but to make blockchain fully functional, the barriers including: technological, governance, managerial and even societal must be removed, which in today’s context becomes impossible.
Indeed, the virtual world is helping to minimize stress and is deemed a revolution on its own. Similarly, many claims that blockchain will help redefine companies and economies. Although the enthusiasm is genuine, certain insecurities relate to the hype. First, it’s not just the security like the collapse of one bitcoin exchange in 2014, which concerns but to make blockchain fully functional, the barriers including: technological, governance, managerial and even societal must be removed, which in today’s context becomes impossible.
So, rather than hitting the horns directly into blockchain innovation, it becomes crucial to understand how to take hold of it. Believe me. Blockchain will always be a foundational technology and not a disruptive one that straightaway attacks the traditional business model because of its lower-cost solutions. Every individual has their own perspectives while judging a technology, even blockchain, as technology is perceived in two variable lights. Let’s see what affirmative and negative perspectives are attached to it.
Pros of Blockchain Technology:
Pros of Blockchain Technology:
- Transparency: Blockchain as a technology works on the trustless network implying there is no need for trust. This is the factor that makes it an immutable ledger that can only be accessed through the permission of members. In every financial system, there are innumerable layers of accountability, but the removal of intermediaries makes it a decentralized network, making it transparent while validating the transactions.
- Security: Today, most of us hesitate to make an online transaction due to fraudulent activities that might arise, but blockchain, as technology has evolved from a complicated string of mathematical numbers that once formed, are difficult to alter, making it impossible to corrupt or be hacked.
- Cost Reduction: every year, thousands of dollars are wasted to regulate the current systems, but incorporating this revolutionized technology eliminates the centralized players, helping to reduce the unnecessary cost incurred.
- Resolves the issue of Traceability: when there is a huge supply chain, the main issue comprises tracing the items that can lead to multiple problems, including theft, frauds, counterfeiting or loss of goods. But blockchain makes the shareability of data prominent making it easy for the customers to trace the data easily.
- Efficient: if we compare the traditional paperwork with blockchain, one can ensure that blockchain technology is far more efficient and speedier. How? First, the traditional processes are time-consuming and are often prone to human error, while blockchain, which is based on a series of algorithms and codes, streamline the process. The removal of third-party mediators becomes an extra plus.
- Practically speaking, hacking into blockchain is nearly impossible, but, yes, there is a clause. If 51% of the users within the network mutually agree to scheme a fraud, then the chances of corrupting the technology are possible.
- Yes, blockchain is cost-effective, but what about the amount of energy that needs to be consumed for making it work in diverse locations. Mining though is cheap, but in terms of electricity, it requires infinite power. Not only does power, but it requires an immense storage capacity, thus increasing the marginal cost.
- Frankly speaking, this new technology is not legal in many countries, one of which is India. There are chances that it will be legalized, but this is uncertain because it will surely cause havoc to centralized authorities like banks, government authorities, or other parties that handle transactions. In return, they will fight back.
- One of the major drawbacks of blockchain technology is its reliability on the private keys. If you want to interact in a blockchain, there is a requirement of a private key which is a long series of numbers generated by the system. The twist is if you misplace or lose the key by any chance, it will be impossible to recover the encrypted data.
- Forget about everything, but if you are illiterate about technology, do you think it will be of any gain to you? Though blockchain is becoming popular, we do not have skilled developers or cryptography experts to handle it. This will further open up the vulnerabilities of the same to the hackers, making them prone to cyber-attacks.
Authored By: Charu Kapoor
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