For as long as you have heard the term “Bitcoin,” you’ve also heard the word “blockchain” thrown around. Blockchain technology was originally put to use once Bitcoin was founded, yet — as often occurs — the technological community soon found other uses for it as well. If you have ever wanted to learn what blockchain was all about, either for your own knowledge or to dig deeper into this area of tech, then this is where you should begin.
Your first question is likely, “Well, what exactly is it?” In simplest terms, blockchain is a mechanism of storing information. The blocks on the blockchain are made up of digital information that is stored in a public database. The types of information that these blocks store may include…
- Transaction dates, times, and dollar amounts
- Transaction participant information
- Information that helps to distinguish them from other blocks and make them unique
Blockchain consists of several of these blocks linked together. For a new block to be created, there is a process that must occur. First, there must be a transaction (i.e. ordering something online). From there, the order must be verified. In the blockchain verification process, you are looking at a network of computers confirming items like time, amounts, and participants. Once confirmed, this information will all be stored in a block and given a unique hash.
Blockchain technology first came to exist in 1991. Two researchers named Stuart Haber and W. Scott Stornetta dreamed up a technology where a system could record timestamps but those timestamps could not be edited. Fast forward to 2009 when Bitcoin launched and blockchain was finally put to use.
How does Bitcoin use blockchain today?
Since Bitcoin is owned by millions of people and is unregulated by the government or any other centralized bank or party, it is considered “decentralized.” This means that computers on the Bitcoin network are the ones that verify the transaction when one person pays another one for a good. When a computer verifies the transaction, it is essentially solving a complex mathematical problem. This problem is called a hash. Once this is complete, the transaction is stored in public records as a block on the blockchain. It is at this point that the information cannot be altered. When computers go through this verification process, they are rewarded with cryptocurrency.
How does blockchain fit into the future?
Even if you have just heard “blockchain” or “Bitcoin” previously, you’ve likely heard that it’s the “future.” But what exactly does that mean? Does that mean we’re going to suddenly abandon paper money and switch over to a system that the vast majority of our world has yet to grasp? That may be a stretch, but here are just a couple of things that are valuable to know about the blockchain for the future.
1. Blockchain may ease cross-border payments
If you’ve ever attempted to do an international bank to bank transfer, you know that it can often be a long and arduous process. The information involved, the verification that takes place, the different currencies you must navigate, and the services that expedite the process can often prove both time-consuming and expensive. According to Deltec Bank, Bahamas- “Blockchain is the technology that may simplify cross-border payments as we’ve never seen before.” Once there becomes a way to regulate cryptocurrencies in different parts of the world and institute the necessary security measures, we’re one step closer to closing this gap.
2. Blockchain may transform the identification process
The Internet offers such a wide range of possibilities, and unlike ever before, you can reach someone on the other side of the world in a matter of seconds. That said, individuals, businesses, and organizations are constantly working to protect and secure identities to guard against the loss of private information and profit. Blockchain technology not only offers the security necessary to take cryptocurrency in a new direction because of its identity verification abilities but a number of other digital applications as well.
The development of blockchain technology offers a wide set of potential uses at our disposal. While you may have first heard the term alongside Bitcoin, you are sure to hear it many more times in the future with numerous other applications. Keep it on your radar and be the first to see its success.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.