Why Blockchain is a Trusted Approach? What Makes It The Emerging Technology?

If the internet was the breakout consumer technology of the first decade of the new millennium, the second decade arguably belongs to blockchain technology. It’s been just over a decade since Satoshi Nakamoto, who can be considered as the father of blockchain, introduced us to Bitcoin through his eponymous whitepaper. And while Bitcoin grew mainstream, thousands of other cryptocurrencies popped up all around the world, each having its niche use cases. But cryptocurrency is just one of the applications of comprehensive blockchain technology, a mere tip of the iceberg. Over time, as adoption grew and people began to see blockchain as a trusted approach, more and more avenues opened up. Blockchain technology was used in implementing smart contracts, supply chain and logistics, IoT, cross-border payments, fraud detection, securing medical records, and more.

What is the real concept of Blockchain?

Blockchain seems complicated, and it definitely can be, but its core concept is quite simple. A blockchain is a type of database. To be able to understand blockchain helps to first understand what a database is.

A database is a collection of information that is stored electronically on a computer system. Information, or data, in databases is typically structured in table format to allow for easier searching and filtering for specific information. What is the difference between someone using a spreadsheet to store information rather than a database?

Spreadsheets are designed for one person, or a small group of people, to store and access limited amounts of information. In contrast, a database is designed to house significantly larger amounts of information that can be accessed, filtered, and manipulated quickly and easily by any number of users at once.

Large databases achieve this by housing data on servers that are made of powerful computers. These servers can sometimes be built using hundreds or thousands of computers in order to have the computational power and storage capacity necessary for many users to access the database simultaneously. While a spreadsheet or database may be accessible to any number of people, it is often owned by a business and managed by an appointed individual that has complete control over how it works and the data within it.

How Blockchains Elevate the Level of Trust in the System?

It wouldn’t be wrong to say that mankind’s biggest invention ever is coming up with the concept of credit. This single human construct has accelerated innovation and expedited our transformation from clueless cavemen to world-conquering humans. And credit, or any other human interaction for that matter, is based on the concept of trust.

What makes the emergence of blockchain a watershed moment for us is that it showed the world that unbreakable, mathematical algorithms are more trustworthy at keeping records than error-prone humans or morally sketchy institutions. Look no further than the myriad multi-crore banking scams that have eroded the trust in centralized institutions.

We see tremendous potential for blockchain in emerging economies. Financial services and insurance in the United States are sophisticated and offer adequate comfort, convenience, and safety measures to service and protect retail consumers.1 This trust in centralized parties, however, is not a universal reality. Thus, in emerging economies, the institutional trust required for the provisioning of financial services and the breadth of coverage of newly growing economies can benefit from decentralized technologies.

Blockchain is a “trustless” ledger technology that minimizes central authority control. It enables peer-to-peer transactions with a minimized need for costly “trusted” third-party assurance, bookkeeping, or facility. Blockchains also provide an immutable history of transactions, which can be leveraged as a bona fide identity for individuals and families without access to traditional, state-sanctioned identities. In this way, blockchain protects against the failure of centralized institutions (relevant in many emerging markets experiencing hyperinflation or broken financial sectors) and enables services for demographics that are often left out of the traditional financial sector due to identity and credit barriers (some 1.7 billion adults across the world).

We hope you have found this article informative and interesting. For more information or queries contact us to know more about this technology.