Bitcoin started nowhere, and today it is a multi-trillion-dollar industry. The single most reason for its rise may be centred around its decentralized mode of transactions that works based on blockchain and peer to peer technology. Let’s understand the concept of digital currency or peer to peer technology along with blockchain!
Why is the decentralization of money important?
Centralization of anything has always led to disasters. It creates a monopoly and takes away from the autonomy of the individual. This also reduces the options for individuals, and the government can interfere with the exchanges made. With decentralization, where no one entity is in charge, the autonomy of currency is restored. It can be used anywhere and by everyone.
Overview of P2P Technology
Peer to peer technology has been around for a long now but was primarily used as a means of decentralized communication between individuals. It is done without a central authority. This technology has now found its way into blockchain and has been popularly used for cryptocurrencies. It has been promoted mainly by bitcoin.
Third-party exchanges always seem to come with extra costs. This system of making it peer to peer reduces the cost and makes the transaction more secure and faster. The profit is usually maximized with peer to peer technology.
Introduction To The Blockchain Technology
As explained by the creator, the purpose of blockchain was to create digital currency using peer to peer technology without the usage of banks. A blockchain is composed of the units we call blocks with information regarding transactions, the time stamp and also the information of previous blocks. Since it is connected with previous blocks, it is called a blockchain.
The main advantage of blockchain comes is that the transactions cannot be done without the digital signature of the concerned individual, making the overall process secure.. Another advantage is that the blocks, once recorded, cannot be altered, thus allowing for transparency and security of the transactions. The regular online payments we make can be easily manipulated and not secure when compared to blockchain transactions, and it makes them much more desirable.
The transactions are fast as they do not require authorizations. It can also be used to transfer the amount to any place in the world in a matter of minutes. Investments in bitcoin can be made without worry. Bitcoin Era is one of the reliable crypto trading platform to make get good returns out of Bitcoin investment.
Digital money has always been liable to the problem of double-spending, that is, the creation of false digital money. This has led to many problems, including inflation. Blockchain is fool proof to double-spending.
What originated from bitcoin has spread to multiple cryptocurrencies and is one of the most widely used technologies now. It is now being researched and enhanced with a lot of investment. The biggest cryptocurrencies Ethereum and bitcoin, use this technology.
Use of Blockchain
Now separating itself from cryptocurrency, blockchain has found multiple uses in several industries and is developing at an expeditious rate. The blockchain technology is now being used for contracts without an intermediate or third party. Including the banking sector, the blockchain technology is also used in in video games as NFTs.
Disadvantage of Using Blockchain
Blockchains are highly digitalized and cannot be accessed once the concerned loses the password. If the individual loses the password, there is little to none that can be done to regain access, and the funds and investments are completely lost. This creates a lot of worry and anxiety.
One more thing we need to keep in mind is that, since now blockchain is becoming a more available technology for the masses, it can be assumed that in the near future hackers might find a way to hack into this technology. So, the security of Blockchain technology cannot be guaranteed in the long run.
When weighing the advantages and disadvantages, it becomes very clear that blockchain technology is one of the best technologies for digital transactions and has allowed many to use digital wallets. The many advantages of bitcoin are due to bitcoin technology and have made it highly successful for what it is today. Though it was solely created for cryptocurrency, it has made an identity of its own and has become one of the greatest technologies. Blockchain technology will keep growing, and its scope is enormous!