Blockchain technology has the potential to singlehandedly revolutionise the way we carry out financial transactions.
By Chimezie Chuta
Introduction to Blockchain
By design, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and permanently. A simple way of passing information from A to B in a fully automated and safe manner. It is a technology system which has been created in order to register and record a list of transactions taking place, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data.
One party initiates the transaction by creating a block. This block is verified by thousands of computers distributed around the world. The verified block is added to the chain, stored across the blockchain network, creating a unique record with inimitable history.
Fabricating a single record would mean falsifying the entire chain in millions of instances. Many blockchain projects use this model for monetary transactions, but through innovation it can be deployed in many other ways.
Blockchain technology was invented in 2008 to serve as the public transaction ledger of the cryptocurrency, Bitcoin. The invention of the blockchain for Bitcoin made it the first digital currency without the need of a trusted central authority or financial institution.
The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.
The blockchain network has no central authority therefore it is the very definition of a democratized system.
Since it is a shared immutable ledger, the information stored is open for anyone to see. Therefore, anything built on the blockchain is, by its very nature, transparent.
Cryptocurrencies are currently the focus point of blockchain technology. The two are intertwined, with various differences. Cryptocurrencies are digital assets that can be exchanged for goods and services in place of fiat currency such as the dollar, pound sterling or euro .
In simple terms, cryptocurrency is just like the money you put in a bank. Although with cash, you take physical coins and notes.
However, money is nothing more than entries in a physical database of accounts, balances, and transactions, which you can only change if you meet certain conditions.
With cryptocurrency, you have money that you can use to purchase items but only in digital form, over the internet or any other peer-to-peer exchange.
A group of people saw the limitations of traditional banking systems and how they could endanger people’s wealth, privacy, and peace of mind.
This led the development of cryptocurrency that cannot be controlled by a single entity but grants individuals the financial freedom to control their own currency, which will only require internet access, not regulatory entities, geographical borders, or governments.
Although cryptocurrencies may not necessarily affect the value of traditional banking and fiat currencies, there are certain advantages they have that are not available to the traditional payment systems.
- Takes away the middle-man: No government or private entity will have control over cryptocurrencies. When you make transactions, you can do it without the need for third parties. This cuts down the time in settling payments and makes for fairer transactions. Moreover, cryptocurrencies cannot be devalued or taken away from you by any government.
Not everyone has access to traditional banking systems. But with cryptocurrencies, anyone who has access to the internet can have a crypto wallet. This makes cryptocurrencies useful in underdeveloped countries.
- Prevents fraud: Because cryptocurrencies are decentralized, this makes them fraud-proof by nature. They cannot be counterfeited unlike paper currency.
Additionally, with cryptocurrency exchanges, anyone who makes a transaction only sends the amount of currency they want to a vendor and nothing more. But with traditional transactions, anyone you send money to will be able to pull not only the payment but also your personal information, increasing the risk of fraud or identity theft.
- Quick and easy payments: When using cryptocurrencies, payment takes place in just a matter of seconds. You don’t need to provide many personal details. The only thing required is the wallet address of the person or entity you want to send the payment to.
Possibilities with Gold
Bringing gold into the blockchain opens up many new possibilities that were not present before. First, transacting with gold becomes an anonymous process.
Utilizing the blockchain, anyone can send payments and transact with a gold or silver backed cryptocurrency.
This protects individuals’ liberties and identity in an age where your information can fall into the wrong hands too easily.
With traditional banking systems, the method of exchanging account information to send and receive payments has led to numerous identity theft issues.
With Kinesis, gold can become an instant method of payment anywhere in the world. With blockchain integration, it becomes a highly efficient medium of exchange.
The world has long moved past gold and instead used fiat currencies essentially backed by nothing, which has led to financial crises in many different parts of the world.
The devaluing of currencies has been going on for decades, further promoting gold and precious metals as the stable alternative.
Kinesis brings back stable value for everyday commerce by bringing gold into this new technology sector and integrating it with cryptocurrencies, promoting mass adoption and accessibility.
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.
Image credit: Launchpresso
Chimezie Chuta is the Founder of Blockchain Nigeria User Group, Africa Lead, Technology & Innovation at Blockspace Africa Technologies and CEO of both Techbuild Innovation Partners and Lagos DrupalVersity.. He is a regular speaker at various blockchain, cryptocurrency and technology conferences both locally and internationally.