Blockchain technology has revolutionized the world since its introduction in 2009. Cryptocurrencies are among the first few applications of blockchain and its recent applications in supply chain, media, and governance projects have highlighted its importance for the world economy.
Blockchain enthusiasts have compared the importance of blockchain tech to how Internet changed the world by virtue of its disruptive decentralization, trustlessness, and accessibility. In Crypto Trader News, we will discuss the problems that blockchain is solving.
Let’s start with a simple question: How does Blockchain solve the problem of double spending?
You might be surprised to find out that fiat currencies are double spent on several occasions; transactions between peers and records that are maintained in physical form put to question the accuracy of the paper trail, or the people or entity that provide those services. We often put too much trust in trust third parties to keep records of our balances and settlements because we are trained to trust banks and entities like MasterCard and PayPal, and their guarantee that double spending will not occur.
Freeing up ourselves from those worries, we might come to realize that the biggest drawback to such a system comes with high transaction fees. When relying on third parties and sharing information of every single transaction, we’ve developed an expensive dependency on them. And here’s another issue: Centralized institutions like banks, may collapse when the economy collapses, which would then crash the entire transaction settlement system. Considering this scenario, Bitcoin was introduced in 2009 to solve the problem of centralization and double spending. In its whitepaper, Bitcoin was labelled P2P electronic cash system.
Transactions on the Bitcoin Blockchain Network are verified through a Proof of Work (POW) consensus mechanism, not by individuals or paper ledgers. As long as the system is decentralized, there will be no collapse, and individuals, more specifically miners, who participate in this decentralized network, help stabilize the network, and they are incentivized to maintain their equipment through rewards and a portion of network fees.
Blockchain technology offers an ingenious solution to problems faced by world commerce and economy. It offers a revolutionary way for peers to exchange value without placing trust in their peers or a centralized institution. In theory, blockchain could help lower the costs of verifying transactions and adding new markets. It’s important to differentiate between blockchain technology and cryptocurrency. Blockchain is an immutable, permanent ledger of all transactions that us it. Crypto currency is a tokenized layer on top of that blockchain. Block explorers allow users to track all transactions if they wish.
Now consider the case of the Basic Attention Token (BAT). Advertisers can purchase advertising space on the Brave network. Publishers and content creators have the option to get ad revenue in addition to earning BAT for user contributions, and users share in the ad revenue sharing for their attention. This is only one application, but the potential to completely metamorphose ad revenue and attention has huge implications for earnings by using a browser to search or use the Internet for things that we already do for free.
Experts are working on blockchains to track goods from birth to grave through their supply chains; intellectual property in the digital world can be immutably time stamped and tracked to its source; contracts are faster and more secure to administer. Blockchain technology and its applications have changed the way we shop, browse and do business globally. We have seen an exponential increase in adoption this year. Many governments are now considering governance projects that affect voting, health insurance and record-keeping, to issuing degree certificates or driver’s licenses on the blockchain. This could be the beginning of a truly digital, decentralized and secure life for the global citizen. Blockchain is a promising technology and has a lot more in store for us. We’ve just scratched the surface of its true potential.
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