Blockchain Technology
Blockchain: a digital, decentralized, public ledger of all cryptocurrency transactions. This
ledger is constantly growing as "blocks", the term for recent transactions, are completed and
verified by many participants. Blockchain technology was originally developed for Bitcoin
and has proven itself as the prevailing model of a distributed ledger technology over the last
decade. The transactions on this ledger are indelible, meaning they are permanent, having
been verified by the previously mentioned community of participants instead of by a central
authority. The rise of Blockchain technology and the lack of a central authority distort the
very foundation financial institutions have set in place, leading to advantages that may prove
to revolutionize the Financial sector as a whole.
Cryptocurrencies
Before discussing advantages of such technology, cryptocurrencies must be explained to the
reader. Following in suit with Bitcoin and Blockchain, there is always someone looking to
make an invention better. This trend can be found throughout history - starting from the
wheel, the automobile, to the very device you read this text on right now. Cryptocurrencies
are no exception. A cryptocurrency is a digital asset that is designed to work as a medium of
exchange, using cryptography and blockchain ledger technology to do so. Bitcoin, plagued
with not only slow and impractical transaction speed, but also large fees has fallen short.
These problems, among other shortcomings, have allowed for the creation and adoption of
thousands of other cryptocurrencies.
Advantages
๏ Anonymity, personal information is not tied to transactions. This protects against
identity theft.
๏ No central authority figure holds onto your money, you are in control.
๏ Blockchain cannot be manipulated by a person, government, or organization.
๏ All transactions are available for everyone to see.
๏ Transactions are verified by a network of users.
๏ Due to the fact transactions cannot be reversed and do not carry personal
information, merchants are further protected from fraud.
๏ Low transaction and conversion fees.
๏ A user can send and receive money anywhere in the world at any time.
๏ Borders, banking hours, or other previous limitations on transferring money are non๏ฟพexistent.
๏ Merchants cannot charge extra fees without be noticed.
Limitations
The lack of ability to use cryptocurrencies for payment in our day-to-day commerce is a
major downfall to this new technology. Merchants must begin to adopt cryptocurrency
payment systems to help bring this technology truly into the mainstream.
On the other hands, Bitcoin, Ethereum, Litecoin and other major cryptocurrencies show
significant growth in value and are expected to see significant growth in the future,
reflecting both a loss of faith in traditional money systems and a growing confidence in the
power of blockchain technology. However these cryptocurrencies are not proving to be very
effective as payment instruments; their growth in value has caused them to behave more
like assets than currency, so investors and miners are holding cryptocurrencies rather than
using them to purchase goods and services. Users have no incentive to trade or sell them,
since once they are traded, owners lose their investment position.