Introduction to Blockchain and Cryptocurrency

If you have been following the banking or investment sector over the last decade, you may have come across the terms Blockchain or Cryptocurrencies. And in trying to learn more, there is a good chance you have also taken a deeper dive into these two terminologies. If not, no worries, in this article, I will take you through Blockchain and Cryptocurrency, their applications and what the future holds for these two technologies.

Let’s start with some definitions;
Blockchain Technology, in its most entire terms, is a decentralized and distributed public (at times private) ledger that records transactions across nodes in a network. Cryptocurrency, on the other hand, is a medium of exchange, just like the US dollar. Still, in this case, it is digital money that interacts in the Blockchain, and it is decentralized (not controlled by any central institution).

Blockchain in the Cryptocurrency Realm

Do you know the famous riddle, “Which came first, the chicken or the egg? "
Many crypto enthusiasts and Blockchain lovers have not been able to solve this riddle as Satoshi Nakamoto developed the two technologies of Bitcoin at the same time. However, Blockchain is the platform, while Cryptocurrency is the medium. Without Blockchain, we would not have Cryptocurrencies. How this works is that Blockchain offers a decentralized platform on which cryptocurrencies can be exchanged, just like a decentralized ledger book. What’s unique about Blockchain is that it records every transaction, with a timestamp and the parties involved.
What’s more, Blockchain records are immutable; hence once these transactions register to the Blockchain, they cannot be altered. In the banking industry this is a massive win for both financial institutions and organizations in the following ways;
Preventing Fraud: No one is trustworthy in today’s economy, and the much-decentralized nature of cryptocurrencies allows anyone to join or exit the network. This kind of system is prone to many vulnerabilities like double-spending or hacking of the digital wallets. However, with cryptographic functions, these two problems are prevented as Blockchain does not allow the same transactions (double spending) stored on the Blockchain.
Cheap and Faster Transactions: With a decentralized ledger, Blockchain facilitates close to real-time transactions between individuals and financial institutions, which enhances faster transactions at lower fees than banks.

Blockchain: Beyond Cryptocurrencies

From an organizational perspective, Blockchain technology is a type of next-generational platform that sets to move industries and organizations to the next level. Let’s analyze some of the components of Blockchain Technology that utilized in business;
Decentralization: This is the most crucial aspect as it results in all the benefits like; trustlessness and censorship resistance. Due to this nature, Blockchain provides a platform through which organizations can develop platforms, DApps (Decentralized Applications), and systems that not only connect them but also provides a transparent network.
Immutability: In any network (more so a public network) of individuals or organizations, there is always the risk of a 51% attack. Organizations may not trust each other to provide valid transaction records or fulfill their tasks. Blockchain Platform ensures all records on the chain are correct and that all services are rendered in the right way with the use of smart contracts. Immutability is crucial to several industries like; identity records, land records, among many others.
Consensus: As previously stated, trust in a public network is crucial. Decision making is also essential. As an organization, you have to trust who you’re doing business with; you have to trust that they maintain their integrity. However, you may not have any way to prove this. With Blockchain Technology, you can easily do this. Blockchain provides a means through which distributed nodes can reach a consensus (depending on the Blockchain type) through consensus protocols.

What is the future for Blockchain and Cryptocurrencies?

The Cryptocurrency boom of 2017 brought both the cryptocurrencies and Blockchain Technology to the limelight. However, this was followed by a famous bear market that led to a crypto-market crash; still, Blockchain did not crush. Blockchain today imagines a world with a lot of possibilities.
Here are a few possibilities of what the future holds;
The US Economy era is coming to an end, and the Crypto era will rise: The International Monetary Fund has stated that the US is yet to face a bear market due to its unsustainable debt dynamics. Currently, the best alternative to the FIAT currencies is the cryptocurrencies, which bring to the table more than what FIAT offers.
Ultimate Transparency in the Industrial Sector: with the introduction of Industry 4.0 (4th industrial revolution), there has been an increasing need for transparent and efficient platforms in the supply chains and industries. Blockchain provides such a platform. Currently, there are several big companies like Walmart that have incorporated this technology. However, soon, more industries will realize the importance of Blockchain and get onboard the Blockchain revolution.
Increased scrutiny in organizations and governments: One of the benefits of the Blockchain Technology is that it holds each party accountable. With the integration of Blockchain in organizations and governments across the world, more individuals, government members, and organizations will be held responsible for their actions, as every transaction gets recorded on the Blockchain.

We are currently experiencing a significant disruptor when it comes to Blockchain, which means more change is guaranteed. Some industries will perish (possibly traditional banks if they do not adapt) while others will thrive.

References:

https://www.forbes.com/sites/forbestechcouncil/2019/06/13/five-predictions-for-the-future-of-blockchain-and-cryptocurrency/#5ca2af7265a9
https://www.pwc.com/us/en/industries/financial-services/fintech/bitcoin-blockchain-cryptocurrency.html
https://www.blockchain-council.org/blockchain/5-critical-components-of-blockchain-technology/
https://www.binance.vision/blockchain/what-is-a-blockchain-consensus-algorithm