Origin,Important problems,Benefits and need for Block chain ..step on Step
The need for an efficient, cost-effective, reliable, and secure system for conducting and recording financial transactions is Blockchain.
Seeing the past, instruments of trust, such as minted coins, paper money, letters of credit, and banking systems, have emerged to facilitate the exchange of value and protect buyers and sellers.
Important innovations, including telephone lines, credit card systems, the Internet, and mobile technologies have improved the convenience, speed, and efficiency of transactions while shrinking and sometimes virtually eliminating the distance between buyers and sellers. Still, many business transactions remain inefficient, expensive, and vulnerable, suffering from the following limitations:
1.Cash is useful only in local transactions and in relatively small amounts.
2.The time between transaction and settlement can be long.
3.Duplication of effort and the need for third-party validation and/or the presence of intermediaries add to the inefficiencies.
4.Fraud, cyberattacks, and even simple mistakes add to the cost and complexity of doing business, and they expose all participants in the network to risk if a central system, such as a bank, is compromised.
5.Credit card organizations have essentially created walled gardens with a high price of entry.
6.Merchants must pay the high costs of onboarding, which often involves considerable paperwork and a time-consuming vetting process.
7.Half of the people in the world don’t have access to a bank account.
One solution that has been developed to address the complexities, vulnerabilities,inefficiencies, and costs of current transaction systems is bitcoin.
Bitcoin is a digital currency that was launched in 2009 by the pseudonym Satoshi Nakamoto.
1.Unlike traditional currencies, which are issued by central banks, bitcoin has no central monetary authority. No one controls it.
2.Bitcoins aren’t printed like dollars or euros; they’re “mined” by people and increasingly by businesses, running computers all around the world, using software that solves mathematical puzzles.
3.Rather than rely on a central monetary authority to monitor, verify, and approve transactions and manage the money supply, bitcoin is enabled by a peer-to-peer computer network.
Bitcoin has several advantages,here are the few important points :
Cost-effective: Bitcoin eliminates the need for intermediaries.
Efficient: Transaction information is recorded once and is available to all parties through the distributed network.
Safe and secure: The underlying ledger is tamper-evident. A transaction can’t be changed; it can only be reversed with another transaction, in which case both transactions are visible.
Key Points about Block chain and Bitcoin :
Bitcoin is actually built on the foundation of blockchain, which serves as bitcoin’s shared ledger.
Consider blockchain as an operating system, such as Microsoft Windows or MacOS, and bitcoin as only one of the many applications that can be run on that operating system.
Blockchain provides the means for recording bitcoin transactions the shared ledger,but this shared ledger can be used to record any transaction and track the movement of any asset whether tangible, intangible, or digital.
Bitcoin and blockchain are not the same.
Blockchain provides the means to record and store bitcoin transactions, but blockchain has many uses beyond bitcoin.
Bitcoin is only the first use case for blockchain.
FACTS !
Currently, the use of blockchain technology is predominant in finance and banking sector. Noteworthy examples are:
- Deutsche Bank: Exploring the use cases of blockchain in currency settlement, trade processing, derivative contracts etc.
- US Federal Reserve: Developing a digital cash system using blockchain with the help of IBM
- Barclays Bank: Runs dedicated labs in London for bitcoin and blockchain entrepreneurs, coders and businesses.
- Citigroup: Implementing a distributed ledger technology using blockchain and a test currency called ‘citicoin’.
- NASDAQ: Using Nasdaq Financial Framework, it has opened up its blockchain services to more than 100 of its market operator clients.
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