Blockchain could be the underlying technology behind Bitcoin, and it has been gaining momentum for several years now. It’s respected by banks, technologists, and insurers worldwide, who are still finding out how to use it exactly.
How come Wall Street embracing it, how come Bill Gates interested, how come Silicon Valley throughout it? How come everyone so stoked up about it?
What sort of Bank Transaction Works?
Our financial program is made on capitalism, and capitalistic ideology supports the theory where all creation methods are privately possessed and work for a profit. Therefore how do two guests, who don’t know one another, confident each other and industry?
They work with a trusted middle man like a bank to produce their transactions.
You almost certainly understand how inconvenient it is to send money abroad. It may take days, sometimes weeks, to clear the payment, and banks are always there to get a big fee from you. Have you ever wondered how come the procedure so darn slow and expensive? Most likely not, and there’s are a reason for that. There are no alternatives.
Let’s have a deeper look at what sort of transaction plays out in modern banking. Let’s say John, a father surviving in New York, wants to send $1,000 to his daughter, Laura, who’s studying abroad in Paris.
Steve confirms the transaction to Laura, and a U.S Bank debits John’s account.
The amount of money lands to the Federal Reserve, where they aggregate an incredible number of daily transactions.
The Federal Reserve sends all of the transactions in a group to the European Main Bank.
The European Main Bank dispatches the pack and controls the circulation to local banks.
After two to five times, Laura sees the same $850 appearing in her local bank account. It has been in the movement for times, and every intermediary in the chain has been charging the transaction with various administration and exchange fees.
The present banking system was invented more than a century ago, but it still works as everyone needs to communicate with someone they could trust. John to Bank, Bank to the Federal Reserve, the Federal Reserve to European Central Bank, etc.
What sort of Blockchain Transaction Works?
Now form a fact where the account holder’s identity is unknown, but everyone in the network could see the transactions coming in and venturing out in real-time. Everyone on the network owns the same ledger, and the ledger is just a chain of computers (called nodes) connected to the network. The transaction from John to Laura will be verified and confirmed by other nodes, in real-time, without delays.
The movement is transparent and requires no intermediaries. The transaction data is distributed (not copied) to the blockchain, and it can’t be altered since it is stored in an incredible number of computers over the world. Every transaction creates a new block, and it could involve several forms of transactions as exchanging cryptocurrencies, contracts, and other information.
Blockchain allows consumers and suppliers to directly remove the necessity for a third party, which is unheard of. The near future is here, and the technology is grown far beyond Bitcoin and digital currencies. Sending money (securely) can be as easy as sending a message.