Having revolutionized the world of financial technology, Bitcoin and Blockchain have become household names and often get used interchangeably. Bitcoin is a cryptocurrency and it uses the blockchain or distributed ledger technology to ensure transparency, immutability and decentralization. Bitcoin and other cryptocurrencies act as a web-based ‘medium of exchange’ and uses cryptography to carry out financial transactions.
Bitcoins can be transacted directly between the two parties with the use of public and private keys with minimal transaction fees. Blockchain is the technology that records and documents the transactions through Bitcoins. However, in terms of application, it has been observed that blockchain technology has found wide-scale application in different sectors and has gained more popularity than Bitcoin. Let us examine the ways blockchain has been utilized by different sectors of the economy and the difference with Bitcoin.
Trans-border Payments
Payments and transactions across the border involve complexities and a lot of time through traditional financial institutions and payment methods. This is because such transactions involve the use of multiple currencies and institutions like banks and are subject to exchange regulations of different countries. All this leads to considerable delay in the process until the recipient actually receives his money and services which accelerate such processes can be availed only after having spent a heavy amount. Blockchain comes as a quick, viable and economical alternative to traditional cross border payments. Blockchain can transfer the amount in real-time transaction processing fees, at a nominal cost compared to the 20% transfer cost of remittances. Although Blockchain too has to bypass certain regulations and security concerns, yet it is less hassle-free than traditional methods.
Smart Contracts
These contracts are computer programs that can keep a check on the different aspects, from facilitation to execution of the contracts. Under certain conditions, they can also be self-executory and self-enforcing, automated, and secure as compared to traditional contract laws. Smart contracts can be potentially applied across different sectors that deal with contract laws. Traditional contracts also have certain advantages, but smart contracts appear to be faster and cheaper. Blockchain technology can be utilized by smart contracts and it would thus make inroads into the business world.
Use in Supply Chain
Several industries are reliant on an efficient and properly functioning supply chain and blockchain has already been utilized for keeping a check on these supply chains. This ensures the efficient functioning of the chain and eliminates the possibility of any human error as it involves a complex process.
Identity Management
Data theft and acquiring sensitive information through illegitimate means has become widespread with various companies and individuals providing their information online. Blockchain technology has been used to showcase how online identity management can be modified to curb these notorious elements, always on the lookout for misuse of available data. Blockchain is highly secure as it verifies the identity of each member on the network chain, and only then the transaction is added to the block. This identification may also be used for other online processes like maintaining records of voters and sensitive information to ensure an efficient electoral process. Sensitive data can be efficiently and securely transferred across different platforms like to maintain records of real estate owners and various other applications.
Governance
Transparency and complete public accessibility can facilitate the process of governance, like in the electoral process. Distributed database and Ethereum based smart contracts can help the process; apps like Boardroom can also increase transparency about organizational management and the sharing of digital assets and information.
Sharing Economy
Blockchain can enable the ‘door to direct interaction’ with ‘peer to peer payments’ for services like cab sharing, room renting and so on. This would establish a decentralized sharing economy in the true sense and customers would not have to deal with an intermediary like Uber or Airbnb. For example, Openbazaar, which uses blockchain to build a ‘peer-to-peer eBay.’
Blockchain has therefore found several applications like in protection of intellectual property, crowdfunding, data management, stock trading, file storage, etc.. It offers qualities like security, decentralization and immutability, for instance, blockchain is not owned by any individual or organization, nor is it regulated by any central agency. This makes it decentralized and adds to transparency as everyone part of the network can access the information. In the absence of a middle agency like a bank, one can directly send digital payments like Bitcoin to the receiver, and users are the only owners of their money.
Conclusion:
Blockchain is also immutable, which means once the information enters the network, it cannot be deleted, undone, or modified. This helps in preventing embezzlement cases and other frauds due to the ‘cryptographic hash function.’ All these qualities thus make blockchain technology highly secure and have catalyzed its application across different sectors, while Bitcoin, though popular, still awaits wide-scale adoption. But Bitcoin can be the good option for investment to make profit from it. You can invest in Bitcoin from the most unique platform – Bitcoin Code. It can lead to earning a good amount of profit from Bitcoin.