Blockchain technology.. the revolution that will upend the financial services market
You may have heard of blockchain technology before. You may be aware that experts consider it a technological revolution, as it is not only capable of changing the financial services market upside down, but all other sectors and areas of business. In the following, we will talk about blockchain technology in detail.
Blockchain technology (block chain in Arabic) is the digital technology on which digital currencies are based. It is a distributed database, and its information stores are not connected to a co-processor. A blockchain is an information technology that is a list of ordered records called blocks. Each block has a timestamp and a link to the block that precedes it.
People can only modify parts of the chain that they own. Access rights are guaranteed by an encryption system. Each user has a combination of private keys that are required in order to record information. Otherwise, there is a special software that makes sure that all copies of the distributed database are synchronized.
Blockchain by its very nature has a high level of security. Its principle was introduced by Satoshi Nakamoto in 2008 and applied for the first time in the form of the digital currency called Bitcoin.
In this case, it uses blockchain technology to monitor all operations, and thanks to it, it was possible to solve the problem of information exchange without a central or organized server (unlike money, digital files can be copied and exchanged again).
The security of the blockchain technology is provided by a distributed server containing the time and pair networking attributes. As a result, the database is managed independently and decentralized. In this context, the blockchain is suitable for recording events – transfers, controlling user data, and confirming origin. Effectively help remove middlemen from all trading operations.
How does blockchain technology work?
Anyone can post information on the network and others can use it. Blockchain technology allows valuable information to be sent and easily accessible. But for this the user must have a personal cipher key which unlocks access to the blocks that the user “owns”.
When you give the key to anyone, you are actually transferring the value of what is in this block to him.
In the case of Bitcoin, the keys allow access to the addresses where the currency is stored. financial value. Here, the blockchain plays the role of the intermediary that records the transfer of funds (traditionally banks play this role).
In addition, blockchain technology helps confirm identity and supports trust between the parties, since no one can modify the information in the blocks without having the required keys. Any changes that are not validated are considered void.
Of course, the keys, as in the case of traditional money, can be stolen. But a few lines of code can be easily protected (unlike, say, the gold kept in Fort Knox).
In this way, the main role played by banks in reducing fraud and confirming the identity and legality of transactions can be replaced by the use of blockchain technology, much faster and more effective.
Why is blockchain technology so important?
Today all of us use a decentralized platform for sharing information: the Internet. But when it comes to talking about the transfer of valuable things, such as money, for example, we are forced to resort to the services of central financial institutions such as banks.
Even modern payment methods usually require a bank account or credit card.
Blockchain technology offers the possibility of eliminating middlemen. It monitors operations and identifies the parties that trade and conclude deals. In the traditional case, banks carry out these operations.
This is of great importance, since worldwide the financial services sector is the largest sector by market capitalization in the economy. Replacing even a small part of it with the blockchain system will not only cause major changes in the financial services sector, but will also increase its effectiveness.
The third function is the conclusion of contracts, which makes blockchain technology useful outside of financial services. The database can contain not only monetary units such as Bitcoin, but any kind of digital information including code.
The implementation of the code begins when the parties enter their keys, thus signing the contract. The program can use information from outside such as stock prices, weather, news headlines or any other information that the computer can process, and automatically create contracts that are automatically executed when certain conditions are met.
This technology is known as “smart contracts”, and its application possibilities are almost unlimited.
For example, a smart thermostat can communicate continuously with the smart electrical grid and send information about energy use. When a certain limit of used kWh is reached, the blockchain technology automatically transfers its price from the consumer’s account to the energy company’s account, automating the billing and billing process.
Let’s go back to medicine. If the doctor or patient enters the personal key into a device such as a blood glucose meter, this device will be able to securely record information and, if necessary, communicate with the insulin delivery mechanism to maintain it at a healthy level.
Blockchain technology is also suitable for protecting intellectual rights. The technology can monitor how often a user uses or copies data and on the basis of which tamper-proof voting systems can be developed, secure information dissemination and much, much more.
Despite some issues, the horizon of blockchain technology is huge and will have many uses in the future. different sectors of the economy.
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