Brad Rhodes: Cryptocurrency, Blockchain Technology Changing the Financial World
Posted Sunday, December 4th, 2022 at 12:00pm
once As the outermost periphery of the global financial system, cryptocurrencies such as Bitcoin and Ethereum have entered mainstream consciousness in dramatic and disruptive ways.
Many of us think that cryptocurrencies are new. But the idea of creating a financial system that is more open, more accessible, with greater privacy and lower costs dates back to the 1980s.
Bitcoin was the first viable cryptocurrency, despite several previous attempts to devise more private ways to execute financial transactions.
Initially, Bitcoin enthusiasts were a select group of early adopters, primarily programmers and technologists. Computer programmer Hal Finney was the first person to download the original bitcoin software in 2009, earning 10 bitcoins for his trouble.
How does it work?
Best not to get bogged down, so I’ll just briefly outline what makes cryptocurrencies work.
Bitcoin and alternative cryptocurrencies are built using something called blockchain technology.
The software is a decentralized, distributed, typically public database that records transactions across multiple computers. Simply put, a blockchain is a digital ledger made up of records called “blocks.” No one can retroactively change a block on the chain without changing all subsequent blocks.
Blockchain is also not limited to financial transactions.
It also acts as a real-time ledger of contracts and physical assets. Because it is open, anyone in the blockchain can see the details of each block. When a block is signed and encrypted, the only people who can make changes are those who “own” the block.
The owner of the blocks can only access them through a unique private key. As blocks are edited, the entire blockchain is updated and synchronized in real time.
Banks and corporations are eyeing blockchain, a technology that could revolutionize the financial world.
It cuts out intermediaries (middlemen), lowers costs, saves time and provides greater financial privacy.
Using blockchain reduces the complexity of transactions. For example, if you buy stocks using the blockchain, your transaction will settle in minutes, not hours. You don’t need someone else to handle your stock purchases.
Furthermore, even without such a thing as “hack proof”, blockchain seems far more secure than anything else available today.
Currently, only about 0.5% of the world’s population is using blockchain technology. However, it will soon become mainstream. Big banks, insurance and tech firms, and venture capitalists pour billions of dollars and thousands of employee hours into blockchain projects every year.
Experts estimate that the banking industry alone could save as much as
$12 billion per year by switching to blockchain ledgers.
Cryptocurrencies based on blockchain technology have the power to revolutionize the way we do business and make global transactions faster and more seamless.
Cryptocurrencies cannot be manipulated or controlled by central banks like paper money. It offers more security and privacy than our current system, and in many ways, it is freer and more democratic. As technology develops, transactions on the blockchain will become more straightforward and more accessible to ordinary people.
If you are interested in blockchain technology and cryptocurrencies, there are many excellent YouTube videos that will give you more in-depth information on this financial alternative. The website can also help you understand more technical aspects of blockchain.
Brad Rhodes lives in Lexington and is a member of Syndicated Columnists.