Fintech has evolved greatly since the early 1900’s. We have evolved from the predominant use of physical currency and local trade, to digital transactions and instant global commerce. It is now possible to purchase goods through ecommerce marketplaces such as Amazon and eBay in a matter of seconds. Furthermore, we can purchase goods with the simple swipe of a debit card – coins and notes are becoming a thing of the past!
The latest form of Fintech to make waves in our society is blockchain technology. Over the past few decades, this type of decentralized payment network has developed and evolved greatly, and we are now witnessing a surge in its usage and adoption by major corporations. This article looks at what blockchain technology is, and why it is becoming so popular.
What is blockchain technology?
At its most basic definition, a blockchain is a decentralized ledger containing monetary transactions across a P2P network. Basically, a blockchain contains a set of rules and protocols that facilitates transactions.
A user will make a transaction request which is then broadcasted across the P2P (peer to peer) network. The transaction and credentials of the user are then validated and the data is added in a chain to a block (hence the term blockchain) and marked as completed. Blockchain technology provides the following benefits:
- Improved efficiency (transactions are practically instant)
- Improved security (blockchain transactions are encrypted)
- Improved transparency (blockchain transactions are stored on the P2P network)
- Decentralization (no restrictive centralized control)
Blockchain technology is all about speed and efficiency. This type of technology allows for virtually instant transactions with a much higher level of security. Furthermore, traditional currency has a centralized control i.e., a nation’s government or financial institutions. This allows for things such as interest rates to be controlled and marginalized. Blockchain technology differs in that there is no central control – it is processed through a decentralized network.
How is blockchain technology being used in society?
Blockchain technology and cryptocurrencies such as Bitcoin and Ethereum are steadily becoming used in modern society. There are still many barriers and obstacles to overcome, but the following is a list of ways that this technology is already being used:
- Banking: Banks adopting the technology include The Royal Bank of Canada and Deutsche Bank
- Cybersecurity: For device authentication advanced security systems
- Gambling: Nowadays people use cryptocurrency to gamble anonymously. Look up some gambling websites on BitFortune if you want to try your luck at Bitcoin gambling.
- Supply chain management: FedEx, British Airways, and IBM have all used blockchain technology
- Insurance: Blockverify is a popular technology used to check for stolen or counterfeit goods
- File sharing: Technologies such as FileCoin and SiaCoin are used for file storage and sharing
- Voting: Blockchain verified voting has been used in several countries to improve transparency
As you can see, blockchain technology is certainly becoming prominent in many areas of business and industry. Aside from the above uses, we also have a variety of cryptocurrencies such as Bitcoin that utilize blockchain technology and act as a form of digital currency that many businesses are accepting as legal tender. The infographic below provides some more information relating to blockchain technology and its uses: