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Why Blockchain Is More Important Than What Some People Think and Believe

Blockchain has become a buzzword in the past few years and it seems everyone wants to talk about this relatively new concept. But do you know what blockchain really is? Do you understand the importance of its implementation in everyday life?

If not, read on as we break down everything you need to know about blockchain and explain why it will affect your life so much over time, especially its importance in today’s society compared to traditional technologies that try to achieve the same results.

Blockchain Technology Explained

First thing first, let’s start with defining the word itself. In simple terms, a blockchain is an immutable ledger that consists of blocks linked together by cryptographic codes. These blocks are chained together using powerful encryption algorithms.

The result is called a “distributed ledger” that can be accessed from any device or computer through public networks.

While traditional centralized databases have been used successfully in several industries, such as the banking and finance sectors, most of them still require trust. You need to trust the centralized entities to never change or modify the records inside those databases.

Meanwhile, with blockchain, you don’t have to trust one single entity since everybody has the same copy of the ledger. The majority will always have to reach a consensus. The more decentralized a blockchain is, the more trustable the data that it provides.

In a blockchain, they help track transactions between different parties without relying solely on third-party intermediaries like banks. This also helps cut costs and increase efficiency while reducing fraud risks.

In addition to these benefits, blockchain can open up opportunities for businesses in other fields such as healthcare, real estate, education, tourism, logistics, supply chain management, etc. It even allows developers to create smart contracts (dapps), which automate certain processes within their ecosystems. Smart contracts use code instead of paper documents to communicate among themselves.

So now that we have covered some basics, let’s look at how blockchain works. We’ll then see why it could change the world forever.

How Does a Blockchain Work

Now that we covered the basic concepts behind blockchain, let’s dive into how they actually work. Every block in a given blockchain network contains information regarding all previous blocks and users who participate in them. The user data usually includes transaction details, balances, addresses, history, and timestamps.

Each block contains multiple records and lists. Each record represents one transaction, and every entry is unique, as the transaction hash shows. Once recorded, no changes can take place unless there’s a consensus reached by all the participants involved, which is practically impossible in established blockchains with thousands of validating nodes.

If someone tries to make alterations after recording, he or she will get rejected because it wouldn’t meet the requirements needed for validation.

Since there isn’t a central authority taking care of overall operations, it makes sure that the system runs smoothly. Furthermore, anyone participating in the process doesn’t need to worry about his privacy being breached since everything stays private and secure throughout the entire procedure.

Why Blockchain Is Important for Our Society

It goes without saying that having a decentralized platform where users don’t need approvals from a single entity to perform transactions is pretty beneficial for consumers. For instance, when making online transactions, it’s actually more convenient to trust audited smart contracts since everything is hard-coded from the moment the smart contract gets deployed.

This is not the case with traditional online platforms since you have to trust the platform won’t do anything to harm you or the counterparty.

Furthermore, many fiat currencies lack transparency. Since cryptocurrencies are always supported by blockchains, you can rest assured knowing that your money was properly handled. Also, due to reduced fees associated with sending funds across borders, cross-border payments are faster and cheaper too.

Some experts believe that blockchain technology will bring forth revolutionary improvements in areas such as health care, transportation, energy, agriculture, insurance, voting, government services, law enforcement, and even arts.

However, it might seem difficult to apply blockchain in non-financial industries. Nonetheless, numerous startups are trying to solve this issue.

Another reason (and perhaps the most political reason) why blockchain is important is that it gives back power to the common man. Most people feel helpless when dealing with large corporations and governments. However, blockchain enables individuals to exercise control over their own data since you own the private key to your own crypto account in the blockchain.

Although blockchain hasn’t completely eliminated traditional systems yet, it shows great promise in revolutionizing various business domains and will be here for a long time to come.

Why Many Traditional Financial Institutions Dislike Blockchain

Despite being hailed as a game-changer, blockchain technology still faces resistance from major players in traditional financial markets. Mainly, big organizations fear losing control over sensitive parts of their ecosystem. That’s understandable, considering blockchain takes away the responsibilities of centralized authorities.

For starters, you don’t have to trust third parties when you utilize public blockchains. When performing transactions, you can send encrypted messages directly to others.

While this sounds amazing, it comes with a downside. A lot of companies refuse to adopt blockchain because of security concerns. Others say that it increases their operational costs significantly. Both arguments are equally valid.

While blockchain transactions can be quite secure due to its immutability feature, the drawback is that it affects the decentralized applications’ ability to be flexible, which means there might be some security loopholes if they are not audited properly prior to deployment. And unlike traditional applications where the developers can just edit the codes, dapps (decentralized applications) don’t work like this.

Nonetheless, although many traditional financial institutions dislike blockchain, they acknowledge its value. Many are working closely with leading crypto projects to improve existing systems. Plus, they recognize that blockchain has huge potential in improving their current offerings.

As blockchain continues evolving, expect more partnerships to emerge between old-school firms and cryptocurrency entrepreneurs. Soon enough, we’ll witness massive transformations in the financial sector.

Blockchain is changing our lives today, and it will continue to grow exponentially. Read also our is cryptocurrency the future of money article if you are interested to see the current state of blockchain industry and where it is heading. This is the article:

The Future Is Bright With Blockchain Technology

We hope you have learned something useful from reading this article. To recap, blockchain technology is a unique type of database that uses peer-to-peer networking and decentralization as its main feature. Its underlying principles give birth to countless applications around the globe.

From powering cryptocurrencies to managing healthcare records, blockchain promises to transform many modern-day aspects. All thanks to the efforts made by passionate developers and enthusiasts.

And yes, we’ve explored many ways blockchain could impact your future. Still, there’s plenty left to discover.

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