The demonstrated ability to guarantee users of high transparency has seen blockchain adoption and use grow rapidly. However, despite the crypto market surpassing the 1.4 trillion dollar mark, a lot of people still have no idea how it works.Here at Hi.com, we will demystify blockchain technology and cryptocurrency to help you comprehend how they work and make the right decision on using them.
Why is it that so many people are unable to stand traditional banks? Why? Is it because of poor security, hidden fees, or processing time? The truth is that all of these factors cumulatively make people feel they want to walk away. Particularly, traditional banks lack transparency, but you need not cry anymore because blockchain technology has come to the rescue.
A Deeper Look at Blockchain Technology
For most people, blockchain is the same as Bitcoin or Ethereum. Well, the truth is that blockchain is the mechanics behind Bitcoin and other cryptocurrencies.
Blockchain is a public or distributed ledger/ database where data is carefully arranged in small blocks and linked chronologically. Blockchain technology is very strong, a factor that makes users to trust it because of enhanced security. After a block has been added, it is almost impossible to get hacked because more than 51% of the users will have to give the nod. This makes hacking near impossible.
Blockchain stands taller than traditional banking because of its unique design. This is just one. Let us have a look at more reasons why blockchain is better than traditional banks:
1. The Architecture of the Blockchain
Blockchain is formed when chains of data blocks with details about the transactions are linked. For data to be included in any of the blocks, there has to be a consensus among the nodes of the network. This implies that hackers find it challenging to break into the database because more than 51% of the servers would need to agree. This is very difficult.
In contrast, databases used by banks rely on centralized systems of control that have a single access point. Therefore, hacking is a lot easier, and user data is more vulnerable.
2. Data Storage and Handling
For traditional banks, the model used for data storage and handling is CRUD (create, read, update, delete). Any of the processes can be used by central authorities to change the data stored on databases. However, blockchains only allow reading and writing. Since a consensus is needed for such an action on the data, it is an excellent layer of security for data protection.
3. Transparency
To make blockchain networks more secure than traditional banks, anyone with the right equipment is welcome to join the network and be part of the consensus system. However, traditional banks use centralized data systems that can only be verified or controlled by an authorized officer or entity. This reduces transparency by a huge margin. The high integrity created by blockchains is making them more attractive to institutions and individuals.
4. Higher Efficiency
If you want to send money through bank transfers, it can take a lot of time, about three days. This is very sad, right?
In contrast, transactions run through blockchains are superfast. In some cases, it only takes seconds to send funds from one end of the globe to another because there is no need for a middleman. Indeed, you can even make transactions at night, on weekends, and on public holidays.
5. Enhanced Traceability
In blockchain networks, data blocks have unique identifier codes that incorporate the data in the block. Again, every code for a block contains details about the previous block. This design helps to protect fraud by ensuring that transactions, time, and those involved can easily be identified. If you are in the supply chain, this traceability is particularly useful.
Blockchain technology is here to take transparency in finance to the next level.