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What Is a Blockchain?

Blockchain technology allows people to transfer cryptocurrencies in the safest way possible. Enter now to learn more about what is blockchain.
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Blockchain has become a very common thing for people to hear about online, but not so much a topic that people understand. The majority of people who have heard the words “cryptocurrency” and “blockchain” are completely unaware of what they mean.

What is a Blockchain?

A blockchain is a database that records information in a way that makes it very hard to hack, change or cheat the system. Blockchain technology allows people to transfer cryptocurrencies in the safest way possible. This independent transition happens on verified peer-to-peer networks and is then permanently recorded on a chain of data as a block within the chain; Hence, the name “blockchain” is used to refer to this large network of transactions.

Think of this technology as something that facilitates the process of trading cryptocurrency with people from all over the world. The identities of those you trade with are never going to be revealed, and yours is also going to be protected and kept anonymous; Not only that – but there will be no third party (company, bank, government) involved in the transaction process either.

How does blockchain work?

 
Credit: Simply Explained YouTube Channel

https://www.youtube.com/watch?v=SSo_EIwHSd4&ab_channel=SimplyExplained

There are many ways to make use of blockchains and some of them are more popular than others. The following are some of the most practical uses that are not simply cryptocurrency transactions such as buying or selling crypto.

Smart contracts

These are basically programs that are executed when specific conditions are met and they are used to allow the automation of agreements between all parties involved in any specific business or project. This is used to release funds, send notifications, issue tickets, register vehicles, etc. The formalization of contracts can also be useful for industries such as insurance. The main attraction with this is the level of security of these transactions is much higher.

Banking

Now that banks have taken notice of the incredibly safe procedures used for blockchain transactions, it has become more than useful to help validate identities and spot any fraudulent attempts. Perhaps we are going to be seeing a larger number of banks that will adapt to this valuable technology in the coming years.

Travel & Tourism

The process of cutting the middleman out is very appealing and the use of Blockchain is helping landlords and tenants handle the process without having to use any specific platform as an intermediary.

Advantages of Blockchain

Transparent and anonymous

This is definitely the kind of thing that is worth considering due to the way that blockchains work. The virtual crypto wallets of each person connected to the chain are anonymous, but they are available to the entire network and this means the level of transparency is unmatched.

Decentralization

The simple fact that there is no government agency regulating cryptocurrency is more than enough to make a large number of people feel encouraged to get involved with cryptocurrencies with the use of Blockchain. Another excellent benefit of decentralization is the fact that this is open 24/7/365, unlike financial entities like banks and other lenders.

Extra safe and efficient

Transactions take place with the highest level of safety to avoid frauds and they are very simple for the parties involved. This is a complete contrast to the protocol-heavy and vulnerable process that banks and other financial entities are using.

Disadvantages of Blockchain

The appeal for criminal activities

Cryptocurrency and blockchain offer a level of anonymity that can be extremely appealing to criminals that want to buy and sell products or even services that are illegal. This is extremely important to consider and this is probably the most negative aspect of blockchain technology.

Cryptocurrencies are still a niche phenomenon

The biggest issue at this point is that most business ventures worldwide are yet to start accepting payments in the form of cryptocurrencies. This means that the blockchain process is still not popular enough to get a massive number of people on board.

Energy costs

The costs of maintaining and powering the blockchain network is significant, but there are many other ways in which energy is implemented that are less beneficial and useful. With that said, the environmental impact is definitely something to consider.

The future of blockchain

The use of blockchain technology is very popular in the crypto field, however, it has already proven its effectiveness in eliminating security risks and the use of third-party entities; therefore, its principles can be used in any other field online, where tracking and trading are needed.

 

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