If you haven’t completely wrapped your head around the concept of Blockchain technology, you’re not alone. Most people haven’t even heard the word, and those that have are unlikely to have even a fuzzy conception of what the technology is about. If you’re in that boat, here’s a quick explanation of what it is, before we get into the ways it is going to change our lives before the end of the decade.
The blockchain, as exampled by Bitcoin, is a way to send financial transactions quickly and securely, without using a middleman like a bank. Every time a transaction occurs, miners expand computer power to try to find a random key that will verify that the transaction was real and not fraudulent. Transactions go into blocks which have a finite size. Once verified, the block is sealed and placed on a blockchain which is a record of every transaction that has ever occurred on the network.
Other blockchains, like Ethereum‘s for example, include applications that function by an algorithm without staffs, CEOs, or conventional management. As Ethereum and other blockchain development teams start to create new ideas for inclusion in their blockchains, we’re going to see the way we transfer money change in some important ways. Here are three examples.
1. Speed of Transaction
Today, any complex financial transaction you make takes time, as a third party verifies any number of security and qualifying considerations about your transaction. Blockchains can transact almost instantly, a system which introduces new efficiency to companies and exchange systems, whether you’re waiting for an online title loan or sending money overseas.
2. Costs Will Go Down
Goldman Sachs has already invested in a free international money sending an application. For decades, sending money overseas has been very expensive, requiring the services of companies like the Western Union which are not terribly affordable or satisfactory to most users. Because blockchain technologies are (usually) necessarily decentralized, it is impossible for corporations to institute fines on transfers of this type, because they don’t own the network. As more improvements and innovations are made on various blockchains, expect to save money in many ways. It’s a true industry disruptor, even though the public hasn’t noticed yet.
3. You’ll Know, Not Just Trust
As blockchains develop, it will become much easier to verify procedural steps that we’ve simply hoped for and trusted in the past. An example has been discussed in the world of organic food. Today, when you look at a bag of apples at a supermarket, you have to trust that harmful pesticides were not used when you see the word organic on the label, even though sometimes they were. With blockchain, the day may soon come where you can simply swipe a QR code and see every step in the growing process, as well as all growth methods and chemicals, were used in the process. This is simply one small example of the ways in which Trust will no longer be required in common transactions because we will simply know what did or did not happen.
Conclusion
Blockchains are here to stay, and they offer many ways to improve our financial system. It’s impossible to anticipate all the changes these systems will bring, but the early news for consumers is good!
