This article was first published on the blog of the Society of Internet Professionals (SIP). http://www.sipgroup.org/. SIP is a not-for-profit, Toronto (Canada) based International organization to connect, learn and share. Our Vision is to provide the opportunity to leverage technology to have an inclusive future for everyone. Since 1997, SIP has spearheaded many initiatives, educational programs, and networking events.
The past several years have been making the bitcoin, the first digital currency in the world, a rampant success. The reason for bitcoin and other cryptocurrencies existence is the overwhelming need to speed up, reduce fees and increase trust while performing online financial transactions across the entire world bypassing government control of currency.
The use of cryptocurrencies such as ETH -Ethereum, BTC- bitcoin – STQ – storiqa – LTC – Litecoin, XRP – Ripple in the financial transactions would not be possible without blockchain which is the underlying leading software platform to support the single shared ledger, an accurate history of recorded transactions for digital assets.
Blockchain stores and transacts the cryptocurrency over the open and public networks. Blockchain has emerged as a dramatically improved platform to support financial transactions for the following reasons:
- Tamper-evident because a single shared online ledger allows accessing records of each transaction and which cannot be altered. If in error, it can only be reversed and viewed by all parties in the transaction.
- Transparency which means consent from all parties before the transaction takes place.
- Reduction or elimination of papers and overhead costs leading to cost efficient
- One-time recording a transaction viewable to all parties which leads to minimizing duration of financial transaction and increased efficiency.
Due to its novel features, blockchain presents essential benefits to enterprises:
- Distribution takes place over the open business networks, enables seamless peer-to-peer communication through sharing the single system of records among them by eliminating the need to reconcile multiple ledgers used previously by old systems to perform online financial transactions.
- Enables secured validated transactions because once all the parties consent to the transactions, they are recorded, validated and cannot be deleted by any party.
- Allows permission based on access rights of each network member to confidential information on a need-to-know basis.
Ironically, the blockchain benefits seem to display important limitations, such as:
- Restricted use because it is mainly designed for cryptocurrencies
- Open, public, anonymous meaning that anyone can join the network and view records, which results in the breach of confidentiality and does not allow to know the identity of the parties in transactions.
- Significant computing power necessary to build highly encrypted software to overcome the limitations above-mentioned and stop forging activities
During its blossoming years, cryptocurrencies and blockchain incurred wide criticism mainly due to the following factors:
- Price fluctuations –solution: new applications that lock the value of bitcoin to dollars, euros or gold
- Necessity to upgrade blockchain software as we similarly do for the software installed on laptops or iPhones.
- Possibility to be used by drugs or weapons dealers, smugglers although here the opinions are divided – see References below
Meanwhile, over the time, cryptocurrencies continue to grow and so does blockchain showing that at least for now fulfilling necessities outweigh the issues related to using it. Broad opportunities arise from the use of blockchain and cryptocurrencies, on one hand, and concerns, as well as the likelihood of government-specific regulatory policies on the other hand. Although the current times foresee a triumph of this way of business and life, only the future will tell if the humans are willing to take charge to expand this crucial technology in a highly efficient manner while elegantly solving its limiting matters.
by Cory Popescu