Virtual currencies have redefined how the world perceives and handles financial transactions. They have also introduced blockchain technology to the world and this perhaps presents even greater possibilities than what digital currencies by themselves have to offer. However the biggest question is, is the blockchain technology a passing fad or is it here to stay? This question can only be answered if certain things about blockchain are understood. These include:
1. Full disclosure
One of the biggest selling points of blockchain technology is full disclosure. Due to the fact that all user activities on the blockchain are monitored and thus traceable, this has endeared it to many fields including the supply chain. As a result of this transparency there is also authenticity since every user of the blockchain can be able to see what is happening.
2. Control and security
The stringent policies of traditional financial institutions are leading to dissatisfaction among users. For instance banks decide the minimum account balance that their account holders should keep as well as allowed payment methods, collateral value, credit advance, transaction fees, minimum and maximum transaction value and so on.
These traditional financial institutions could also end up making bad investments and consequently losing money belonging to their customers.
With the blockchain technology control is returned to the people so that they can make their own decisions regarding their finances.
Though banks make efforts to ensure that the money they are holding for their customers is kept safe, the tradeoff is that customers cede control to the financial institutions. The authenticity and full disclosure feature of the blockchain ensures that users have full confidence in both the safety and security of their financial transactions as well as money.
While the ledger is public the data contained on a blockchain is encrypted using advanced cryptography techniques. This makes hacking difficult. Additionally since there are no third parties interference is also minimized.
3. Spending costs
In monetary transactions the intermediaries are the financial bodies which assist in the sending and receiving of money. For this service they charge a fee and it has emerged as a good source of revenue for financial institutions. However for the users these fees and charges are usually exorbitant.
Card processors such as Discover, Visa, MasterCard collect a certain percentage when money is sent or received and the figure is usually between 1.44% and 2.6% per transaction. While this might seem tiny it is not for retailers whose transaction values are huge. With blockchain however fees are historically lower. There is also the possibility of merchants dealing directly with customers and thus doing away with intermediaries.
4. Rapid expansion
While blockchain technology was originally meant for financial transactions it has now permeated other sectors and this is expected to continue as more people become aware of the possibilities it presents. With time blockchain infrastructure in various sectors will become more adaptable, more user-friendly, more secure, faster and better and thus ensuring that it proliferates even more.
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