Using the Blockchain for Financial Services
If you want to know more about the world of Cryptocurrency and why it is becoming such a hype in the financial world, then you will definitely want to read this article. Specifically we will discuss what Blockchains are, how they work, and how you can participate in the network. After reading this article you should be able to understand the benefits of joining a Blockchain project, as well as what you need to do in order to get started. At the end of this article I will give you a link to a free Blockchain demo account that you can use right away!
A traditional database management system, called a database server, maintains the records for all transactions on a public ledger. The ledger is also called the shared ledger because all the transactions are made on this ledger. Blockchains are like the traditional ledgers used for public transactions but on a much larger scale. The main difference is that instead of each user having their transactions tracked by their own copy of the ledger, all transaction information is logged on to a centralized database, which is maintained and updated by the core developers and nodes on the distributed ledger.
A major advantage of using the Bitcoin protocol for recording transactions is that anyone can do so without needing to have any previous experience with cryptography or programming. There is no need to worry about being able to trust strangers or making them accountable for their transactions since the transactions are encrypted and are recorded on the blockchain. Transactions are controlled by two parties instead of one. This is referred to as the permission based or Byzantine Fault Tolerance.
Security is also a big plus when considering a move towards an alternate way of conducting financial transactions. The bitcoin network is completely secured with strong encryption and a lot of factors make it almost impossible for anyone to break in and tamper with the ledger. Transactions are recorded on the Blockchain by a process called block chain, where each transaction is assigned an encrypting code which ensures its authenticity.
The problem with relying on the centralized authority system of the traditional monetary system is that the central bank can manipulate the supply of money and credit that it offers to promote its own interest. If a country needs more money, it may buy dollars from its banks at a lower rate, giving people more purchasing power and ultimately increasing economic activity. However, if the government decides to devalue the national currency, the supply of dollars will be reduced and this will cause hyperinflation, which is quite similar to the Zimbabwe crisis. The problem with the Zimbabwe government’s attempt to devalue the currency was that it caused a hyperinflation which caused hyperinflation in other aspects of the economy.
The bitcoin protocol, therefore, provides a secure and reliable method of recording and transmitting information while avoiding currency risks and the problems of hyperinflation and deflation. This allows for a flexible and adaptable business model, because the ledger is global and can be accessed from anywhere, whereas the traditional financial system requires a specific computer and internet connection to transact. With the blockchain, any computer containing the needed software can act as a part of a distributed ledger, therefore ensuring that transactions are secured by a central administrator. This also reduces the costs associated with running a global network of servers and computers.
One of the most important characteristics of the ledger is that it is open to anyone who wishes to participate, which is different from the conventional server database system. The nodes in the system must be regularly monitored and maintained in order to ensure that only legitimate participants are accessing the information recorded. This is not an issue for financial transactions, since only these parties actually need access to the information stored within. Also, nodes must be kept in constant contact with each other in order to avoid delays that may affect the efficiency of financial transactions.
Another major advantage of using the Blockchain as a distributed ledger is that it provides a completely localized application that can be used for localized services. Distributed ledgers such as the Bitcoin ledger are useful for making transactions for local areas. However, other specialized distributed ledgers may be used for international and global trade and financial services. Since the transactions are decentralized, there are no problems associated with security and frauds, which make these specific applications very popular among businesses and individuals.