Blockchain technology is on everyone’s lips but hardly anyone understands what it exactly is. Nevertheless, the expectations for this technology is high. So, first of all, let us know about digital cryptocurrencies such as Bitcoin so that we can understand this technology’s potential for the industry.
Bitcoin, often defined as a cryptocurrency or a digital currency — is a type of money that is completely virtual.
It’s like an online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether.
How Blockchain and Bitcoin are related?
Blockchain is the technology that is used to store all the transactions related to bitcoin. It is an immutable record book of all the bitcoin transactions.
suppose, If you consider blockchain as a smartphone. Then bitcoin is your Paytm application.
Why has blockchain been getting so much buzz
The buzz around blockchain seems to be natural.
I think these are the main reasons :
- Transactions are becoming more global. A lot of people are thinking about ways to reduce conversion rates.
- Dollars, Rupees, Dinars, Euros and so on. There are just too many currencies to deal with when we are traveling!
- If metals can be standards for values, why not bare-metals? ;-) (Bare metal servers and their computing power which takes electricity — which can also be a standard. However, the standard value associated with this kind of activity is questionable and maybe that’s why it is philosophically hard to accept as a means for value exchange)
- Computing infrastructure is upgrading. Hardware is becoming tinier and cheaper. So, processing power and storage has become more affordable. Employing complex security operations during payments became possible.
- Distributed data storage and consistency-handling evolved to a stage where we can efficiently store and maintain ledgers.
- Distributed data storage and consistency-handling evolved to a stage where we can efficiently store and maintain ledgers.
- Blockchain also provides possibilities of building in modes of payment (intelligent contracts) into financial transactions. Adding to that funding initiatives through bitcoins or ethers are creating very positive energy around innovation in the space.
- Economists, banking professionals, and technologists are getting on to the same page when it comes to security, encryption, transaction tracking, record/identity validation, and contract management mechanisms made possible by blockchain.
- Government agencies (especially in the developing world) are at the verge of internet revolution and digitization. This is leading to awareness and openness in welcoming innovation and safe-experimentation at a smaller scale in this space.
The best application that blockchain technology can be used for
Blockchain technology can be used for many different applications and the way you use it makes it different. We can talk about 5 successful product uses cases of blockchain this year, the list is as follow:
- Streamlined supply chains
2. Forming smarter predictions
3. Building decentralized apps
4. Simplifying the Internet of Things ( this represents one of the major pillars of greater automation efforts)
5. Fortifying identity management (preventing identity theft)
Major limitations
a) Challenges: i. Technical aspects: Some of the characteristics of the blockchain technology itself limit the commercialization process.
1. Performance: The performance of the blockchain node determines the speed of the transaction. At present, the mature blockchain system can trade at a speed of up to 3000 TPS. If you want to do commercial large-scale, performance is not enough.
2. Scalability: The blockchain adopts distributed nodes. It is difficult to increase computational power through traditional horizontal expansion (increasing the number of nodes). At present, companies have studied the use of logical nodes to increase the computational unit under the logical nodes. Improve performance.
3. Security: There are also 51% attacks in theory. For example, if more than 51% of the accountants modify the accounting records, the previous transactions can be overturned.
4. Many of the problems in blockchain technology have not been resolved, and there are no large-scale application cases for test verification. The number of nodes in Bitcoin, the most successful commercial case, is only about 20,000.
ii. Application Scenario: At present, blockchain technology is very hot, but there is still a lack of killer applications on the market to promote the development of blockchain technology. The most successful application at the moment is Bitcoin.
iii. Standard level: The current technical standards are missing, and no mature solutions have been formed in terms of storage, communication, transmission, and network security.
iv. Policy regulation: The application of blockchain technology will also be affected by the regulatory level. Recently, domestic ICO-related token-issuing products have been characterized as suspected of illegal fund-raising. The policies and regulations related to the blockchain vary from country to country. With the rapid evolution of the blockchain and the development of business, policies and regulations must also be properly adjusted to better promote the business of blockchain healthy growth.
A popular case study in cryptocurrency banking services
With a market cap over $68 billion at the time of this writing, Bitcoin represents a massive demographic of new wealth that traditional banks have neglected. But financiers and hedge fund managers are discovering how the blockchain can improve their operations.
There are between 20,000 to 200,000 crypto millionaires, according to some estimates. Even mainstream finance heavyweights like the Rockefellers are in on Bitcoin.
Financial institutions have taken note, and are educating themselves on the ins and outs of cryptocurrencies. Some even offer crypto-centric financial management services. As the public understands how cryptocurrencies can diversify assets, high-value clients may urge banks to dive further into the crypto sphere. Banks who comply with regulators to pair their strong reputations with cryptocurrency offerings could have a significant competitive advantage.
These companies are developing cryptocurrency banking services.
Companies Trying to Solve This Problem
- Hypothekarbank Lenzburg (Hypi) — Announced opening business accounts for crypto companies.
- Falcon Private Bank — Private Swiss bank. Blockchain asset management service accepts crypto-derived wealth.
- Bermuda Government — Signed MOU with Shyft Network. Did the same with Finance Group for blockchain projects.
- Goldman Sachs — Owns Circle, which launched Circle USD Coin. Opened “Bitcoin trading desk”.
How is blockchain technology going to most directly improve and affect our lives?
It will rapidly help us in development and efficiency with our daily lives, look at projects like Tokoin.io- they have created a platform for all small businesses around the world who struggle to achieve greater goals with finance and connections to expand their business ventures. This is just an example of what blockchains are doing for our world, it’s here to stay and it’s just the beginning.
Conclusion
Other than these few examples, the revolutionary technology of Blockchain holds a high potential for applications in many different industries and sectors. While some industries have already started adopting blockchain in their businesses, many are still exploring the best possible ways to start with.
Blockchain is a new name in the world of technologies but it is definitely the one to last. Even in the early stages, the technology has gained huge popularity starting with their very first application of cryptocurrencies. More areas of applications are being discovered and tested with each passing day. Once the technology is adopted and accepted on a global level, it’ll transform the way we live today.
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