Blockchain : The Future of Digital Payment

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  1. What is Blockchain?

Today we rely completely on the middle man for our day to day services like banks, service providers, and credit card companies. Blockchain is a vast global distributed system acting as middlemen which runs on systems around the world and is open for everybody. Where trust in not established by a middleman but with mass collaboration, clever code and of course cryptography and that’s what this amazing technology is.

Usually while working with digital content you are sending a copy and retaining the original with yourself but when it comes to value based things like money, stocks bonds and financial assets, sending a copy is not a good idea, for example : If I am sending you 100 dollar a payment for something, it become really important that you have those 100 dollar and I have don’t, because if I can share the same 100 dollars among other transactions than the 100 dollars becomes worth less.

  1. How Blockchain works

Using Blockchain buyers and sellers can transfer value directly to each other over the internet in the most secure way possible without the need to third party. Blockchain is a distributed ledger maintained globally on multiple systems across the globe not owned by any specific party, the database of transaction is secure with clever code and strong cryptography making it hacker proof. Blockchain will do for business what internet did for communication.

Simple Real Life Example : A journey of diamonds from mines to consumer hands covers a complex path of legal, regulatory, financial manufacturing and commercial practices. Current supply chain for diamonds has to rely on intermediaries on every step of the way from government officials, dealers and banks which adds time and cost. Smuggling and frauds in diamonds trading can hamper governments in collecting fair export taxes and as a result consumers will face the cost of counterfeit products or unethically mined stones.

This is where Blockchain can come into picture to rescue us and has the capabilities to eliminate these vulnerabilities with distributed, secure and transparent transactions. Block chain provides all parties involved with synchronized network of transactions, it records every sequence of transactions from beginning to the end, whether it is 100 steps in procuring goods  or just a single direct transaction. Each transaction that occurs is put into the block and each block is connected with the one before and after it, then groups of transaction are attached together and the fingerprint of each transactions added to the next thus creating an irreversible chain.

Block chain is capable of tracking goods from the raw materials to the finished product in consumer’s hands with embedded security and transparency. Block chain is distributed, permission-ed and secure which makes it more reliable than the traditional payment systems used currently globally.

Blockchain ledgers are distributed across the network which ensures no one person or an organization can edit the transaction records. All parties involved in the trade of goods from raw to finished products owns a copy of every single transaction data and no transactions can be added to the Blockchain without consensus of across the parties involved. This means no single entity or a company can add or alter the transactions without being permanently recorded which makes it highly secure eliminating the risk of frauds.

  1. How to use and utilize Blockchain as an individual                                  A) Set up your Blockchain wallet (https://blockchain.info/)

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B) Get some bit coins (https://bitcoin.com)

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C) Find merchants who accept bitcoins and start trading

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D) If you want to receive bitcoins you need to share the code generated by your wallet

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  1. Blockchain Benefits and Challenges

Benefits

  • It enables to make exchange of value without a third party being involved
  • Wallet owners has full control over the information and resources
  • The data in Blockchain is consistent and secure
  • Due to its decentralized nature the technology is not prone to central point of failure
  • Any changes made to the transactional records is publicly viewable
  • Helps ins lowering transactions costs

Challenges

  • The underlying infrastructure needs to be reliable and robust to support faster transactions
  • Blockchain technology has to be accepted by the government regulations for its widespread adoption
  • Relatively higher energy is being consumed in validating Blockchain transactions
  • High initial capital is required for large business environments
  • Still a few privacy and security concerns needs to be addressed for gaining trust from general public
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