So you are living in this Digital Age and have accepted the centralized online payments system. But lately this term “” has taken everybody by storm.What is ? Moreover, it makes you wonder why everybody is talking about it even when the most hyped crypto-currency is not doing so good!
Why traditional payments are not perfect.
Today everybody knows how online payment systems work. You make a purchase or you make a transfer, you pay the funds and it is validated by a central authority i.e. payment gateways or banks and then cleared. But it has certain bottleneck issues which questions the future of such systems.
High transaction fees for global payments
When making an international purchase, the user often encounters the market currency conversion rate to be much higher than what they are getting charged. Here, the banks are getting their cut.
Transaction time and lack of transparency
Usually it takes significant amount of time for the money to be reflected in your bank account in most cases. In certain scenarios it takes more than a week for the transaction to go through. Senders rarely know the status of their transaction or when the funds will reach the recipient’s account. Its not that the banks are not sharing details but often they also rely on other banks in chains for such transactions which leave them with limited control over the costs and time.
There are more shortcomings to talk about but these are enough to prove the point. I think they are fantastic but certainly not the most loved approach for global transactions.
Blockchain solves each of these issues. First thing to note about is, there’s no central authority. A is maintained by group of individuals across the globe who are unaware about each other’s identity. It is the system of a decentralized that contains blocks with set of transactions. When its decentralized, a question of privacy and manipulation may pop up in mind but answers this and other questions very well.
is immutable.
How? Think of a simple metal chain has number of small mettle rounds tangled with each other. takes this logic to next level. Each block in the chain contains hash of previous block. Assume that we have 5 blocks with several transactions in each on the central for a . Now an intruder wants to change a transaction in block 2. Changing a transaction in 2nd block will change the hash of that block. Now the hash of 2nd block needs to be updated in 3rd block as the previous hash and same for the rest of the blocks. For validation purpose, the hash(last_block) in the chain is compared with hash(last_block) of all the other copies of the . If its not the same then data at this node is considered to be invalid.
transactions are secure completely anonymous.
It offers its users, complete anonymity. All the transactions are saved in the blocks anonymously in the . When making a transaction in crypto currency, we do not have to trust a single authority who has control over our funds. Instead its verified by every computer in whole network. Valid transaction is then saved in a block and is locked with a key which is HASH value. Once the block is saved in the , it stays in there forever and it cant be altered in any case.
This is the beauty of blockchain!
Claps are appreciated 🙂
Published at Sun, 24 Feb 2019 23:56:34 +0000
