From the balance sheets in companies to the sale of digital non-fungible tokens, the blockchain and cryptos are everywhere. Now, it is not uncommon to get a crypto ATM at your local bar. Although they were initially feared from the misconception that they were associated with the black market, the truth is now out: blockchain is good and has multiple solutions to many global issues.
Even with the benefits that come with blockchain and cryptos, many are still sceptical about their use. So, should you be involved? This post digs deeper into blockchain to demonstrate how it works and explain why you should be involved.
What is Blockchain?
A blockchain is a method of recording information so that it is most difficult or impossible to change or cheat the system. It runs as a distributed system where all the members on the network have a copy of the database and also help with running it. Using distributed ledger technology (DLT), blockchains help to make transactions fast and easy because all users work on a peer-to-peer system.
When you initiate a transaction, such as sending funds, it is picked up by the nodes on the system that do three things: confirm there are enough coins on the sender's account, deduct the coins from the sender and add them to the recipient's account, and add the information on the blockchain. Then, the nodes are paid part of the transaction fee paid by the user. In some cases, especially when dealing with proof of work (POW) cryptos, the rewards might be in the form of new coins.
Comparing Blockchain to Centralised Financial Systems
Before looking at the main reasons blockchains are the new trend and redefining the future of finance, let's compare them with centralised financial systems. A good example of a centralised financial system is a bank.
In a centralised system, the servers or databases are held in a specific area. Also, there is a team or a few individuals who are entrusted with maintaining the database. If changes need to be made, perhaps to adjust a person's details, the task is done by the authorised personnel. This creates serious challenges because transactions can only be made when authorised persons are at work, and it might be impossible to operate on weekends, at night, and during public holidays.
A blockchain is the direct opposite of a centralised system. As a distributed ledger, the task of handling transactions is done by nodes or users. If one node is not available, the others will always be there, making it possible to run transactions any time of the day, night, and public holidays.
Perhaps the most notable difference is that blockchains are immutable. Therefore, details added to it can only be read but not changed. This means that you will no longer have to worry about losing your information, even in the event of a disaster. No act of sabotage or cyber-attack can clear the database. Therefore, your information is safe and permanent.
Benefits that Make Blockchain the Best Choice for Modern Finance
If you are out shopping, perhaps in a busy store or online marketplace, there is no doubt you would prefer the safest and fastest method of payment. This is one of the reasons why blockchain and cryptocurrencies stand taller than peers. Because payments are peer-to-peer, the risk of suffering from identity theft is low. Other benefits of using blockchain include:
- Transactions on the blockchain are completed fast.
- The cost of sending funds and other transactions is pretty low compared to using banks.
- You can use decentralised finance (DeFi) platforms to make passive income.
- There are many blockchain applications, from paying for products in shopping malls to trading the cryptos on the exchanges.
Modern finance is adrift as governments, companies, and individuals look for more secure, cheaper, and convenient methods of payment, trading, and generating revenue. Blockchain has proven to be a reliable technology that delivers more than people would anticipate. Indeed, blockchain benefits are expected to continue growing in the coming years. Visit hi.com to learn more about blockchain and its uses, including how to buy, earn, and send cryptos. You can also send your coins to hi and start earning up to 40%.