Before we delve into this topic, a few concepts need to be cleared. To begin with, let us first have a look at the definitions of the two things that we are dealing with in this article. Blockchain is a kind of technology which supports the existence of a cryptocurrency. What do we understand about cryptocurrency? It is an exchange medium, such as the US dollar, which is digital in nature and incorporates the use of cryptographic techniques and other related protocols in order to track fund transfer. Notably, Bitcoin is one of the most popularly known cryptocurrencies. You can opt for an MBA in fintech training program to learn more about these concepts.
Blockchain technology refers to a decentralised ledger that keeps a track of all the transactions that take place over a peer-to-peer network. With the help of this technology, participants can easily confirm the transactions without the need for an authority that will be sitting centrally. Some of the potential applications are fund transfer and trade settling. Blockchain technology helps to provide a secure and transparent solution for the stakeholders so that they can connect with ease.
Some applications of blockchain in the age of cryptocurrency
Stated below are some of the applications of blockchain technology:
- Transfer of money: Blockchain technology facilitates an easy and quick transfer of money and is also inexpensive as compared to other modes of money transfer. This holds especially true for the transactions that take place cross-border as they might be expensive and very time-consuming. While other modes of money transfer can take multiple days, that is not the case with blockchain transactions.
- A decentralised mode of exchanging cryptocurrency: In the case of a decentralised money exchange, investors do not have to deposit the assets to a centralised authority. This enables greater authority and control. Blockchain transactions mainly deal in cryptocurrency; however, this decentralisation could apply to other modes of currencies as well.
- Smart contracts: If you are aware of cryptocurrency investment, then you must have gained some idea about smart contracts. Notably, smart contracts are contracts that can be executed by themselves. Blockchain technology, which deals in cryptocurrency, makes significant use of this concept of smart contracts.
These programmes are written in such a manner that they self-execute after a certain condition is met. Codes are used to define the conditions and enforce the contract's rules. After all the conditions are met, the smart contract can run autonomously and one will not have to overlook if the contract is fulfilled.
- Useful for real estate transactions: There is a lot of red-tapism involved in real estate work. These transactions include a lot of paperwork in order to verify the financial information and clarify the ownership. The deeds and titles are then transferred to the new owners. With the help of blockchain technology, it will be easier to record all the real estate transactions which will ensure a secure means of verifying the transaction and transferring the ownership. This can help to speed up the transaction, slash down the formality of paperwork, and also make the process inexpensive.
Advantages of blockchain
There are many advantages of blockchain technology. And, they are as follows:
- It ensures higher accuracy: In a blockchain transaction, there is a provision for verification using multiple nodes. This helps in the elimination of errors. This is not possible in a transitional database. Blockchain ledger also makes sure that every asset is identified individually and is tracked on the blockchain ledger. This eliminates the chance of double spending.
- It eliminates the need for intermediaries: In the case of blockchain transactions, the two parties that are involved in the transaction can be on the monitoring end themselves and complete the tasks without any kind of third-party involvement. This helps to save time and reduces the cost that is otherwise incurred on paying an intermediary such as a bank.
- All the transactions are secure: In the case of blockchain transactions, there is barely any scope for fraudulent transactions. Each and every node verifies the transaction details and then processes them further.
- Efficient translations: Blockchains are functional 24/7. With the help of blockchains, people are able to perform the transfer of finances and assets in a more efficient manner. They do not have to rely on manual methods.
Blockchain is an essential feature of cryptocurrency. It is cryptocurrencies that have fuelled the growth of blockchain over time. The terms blockchain and cryptocurrency have become synonymous. This is because blockchain, whose inception dates back to 2009, was the first database that was used to store Bitcoins. Blockchain acquired its name due to the technique that was used, the transactions were grouped into data blocks and then chained using a mathematical function.
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