Blockchain and Bitcoin are not to be confused. Blockchain was originally invented for the digital currency, Bitcoin. Blockchain, on the other hand, is the technology that is used by Bitcoin to allow for a secure and public transaction to take place. The tech community has been finding other potential uses for the technology besides Bitcoin and it is becoming all the more popular.
In simple terms Blockchain, is digital information that is being circulated (not copied) on the internet. A Blockchain consists of a number of blocks. Each block, within the larger Blockchain, holds a record of transaction relating to specific data. Each block, in the Blockchain database, reaches completion once it is at optimal capacity and can no longer be updated with new data. Information held on a Blockchain exists in a shared and continually reconciled in a secure database. It is worth noting that the Blockchain database is not stored in a single or hidden location. The Blockchain records are accessible and verifiable by the public, making it increasingly more difficult for the system to be hacked.
Blockchain database is usually hosted by numerous computers simultaneously and its data can accessible to everyone on the internet.
Blockgeeks says the following on how Blockchain works:
“Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”
Why is Blockchain ground-breaking?
The Blockchain technology can work for almost every type of transaction involving value, including money, goods and property and its potential uses are limitless. Another advantage of using Blockchain is that it has the capacity to reduce fraud as all transactions are recorded and distributed on a public ledger, which everyone can access and see. The benefit is that Blockchain allows consumers and suppliers to connect directly, removing the need for a third party. By removing the middleman and working around the traditional banking system aims to go for smaller transaction fees.
Another benefit of Blockchain is that it offers the potential to process transactions considerably faster. Unlike traditional high street banks which are open during normal trading hours, Blockchain transactions can occur and be validated around the clock. Blockchain developers have suggested that their networks can validate transactions instantly.
Who uses Blockchain?
If Blockchain goes viral anyone with access to the internet would be able to use it to make transactions. However, it is estimated that only a very small proportion of global GDP (around 0.025%, or $20 billion) is held in the Blockchain, according to a survey by the World Economic Forum’s Global Agenda Council.
But the Forum’s research suggests this will increase significantly in the next decade, as banks, insurers and tech firms see the technology as a way to speed up settlements and cut costs. Big companies eager to adapt Blockchain include UBS, Microsoft, IBM and PwC. The Bank of Canada is also known to experimenting with the technology.
Are Blockchain transactions anonymous?
Most Blockchain transactions are not private. As a result, all Blockchain transactions can be traced back to the sender or receiver of funds in that transaction.
That being said, Privacy Coins, which is a separate category of digital currency, is working on finding ways to make Blockchain transactions untraceable. Their efforts comprise of increasing the protocols that are designed to conceal, as much as possible, the identities of senders and receivers of funds. Whilst Privacy Coins have been labelled as a safe haven for those engaged in criminal activities, the developers of Privacy Coins have been at pains to stress that the majority of their community members are legitimate consumers and businesses.
By Jahed Morad at Gulbekian Andonian Solicitors
Jahed is an experienced lawyer whose practice comprises of immigration, employment, and commercial law. Jahed is also an avid writer who enjoys sharing insights and tactical know-how relating to his areas of expertise.