The twentieth century saw the start of amazing technological advancements. This has given the next century a head start on nurturing technology to its full potential. Almost all transactions nowadays can be done with just a few clicks from a computer or even from smartphones. You can communicate, do business, and send money easily.
A digital world has been established. One that can cater everything from international money transfers and payments to global trading of products and services. And in our continuous quest to make our lives easier, newer and better technologies focusing on electronic transactions are being developed. With all choices available, the challenge now is to find a trustworthy system for businesses.
Security, accessibility, and cost efficiency are just some of the things to consider when looking for a system that will help handle transactions. These are guaranteed by the blockchain technology.
Blockchain was invented by Satoshi Nakamoto in 2008. It is a distributed ledger where transactions are logged, stored, and secured. Every transaction entered by a user is recorded in ordered accounts called ‘blocks’. These blocks are non-modifiable to ensure that no fraudulent activity is done by altering data retroactively. One can only create a new transaction that can be linked to the original transaction. Thus, a new block is added to the chain.
Once data is recorded in the blockchain, the information is then verified by the ‘nodes’ who will then confirm the validity of the transaction. If the payment transfer request is found valid, then the payment is transferred and the bank receives the money. On the other hand, if it is verified invalid, the transaction is automatically cancelled.
After the money transfer transaction is verified and completed, it is then logged to a ledger to keep track of the deals processed by the user. This technology simplifies and limits transactions to suppliers and buyers only, removing third-party intermediaries out of the picture.
This secured and recorded method to send money internationally and of processing transactions is proving itself useful in the following ways:
- Record Keeping – Blockchain promotes decentralized consensus where instead of all computers updated through a centralized system, each computer works as an individual station but with the capability to still share files and resources. Thus, making it ideal for secure record keeping. Medical records can be uploaded without compromising the privacy of the patients. Company records can also be stored, preserved and destroyed as intended by the user or the holder.
- Identity Management – Aside from keeping everything recorded for transparency, it is also important that businessmen get to manage who can view important information about certain company transactions. Blockchain allows the user to assign individuals in the organization who can view and access significant and sensitive information by ensuring that these people are accessing them for the right reasons.
- Digital Stocks – Instead of physical money, blockchain uses digital coins to trade stocks and other assets. In the traditional way of stock exchange, shares are sold, bought or traded with the use of a middle-man like the NYSE. Blockchain, on the other hand, allows shares to be sold and bought easily with just the supplier and buyer involved in the transaction.
With all above advantages of this ledger, it is very encouraging indeed to start using the blockchain for vital business processes such as international money transfer. However, this will involve entrusting your investments, capital and information to an electronic system. At this point, one will have an important question to ask.
How safe is the blockchain?
Security and safety of assets, investments, and capital is a top priority for all businesses. Money is now transferred all over the world, 24 hours a day and 7 days a week. Materials are purchased, freelancers getting paid, and services paid electronically. It is important that the mode of transfer is secured and trustworthy.
One way to protect electronic money transfers is through the ‘public-key cryptography’ feature. Blockchain provides two types of keys. One is a ‘public key’ where the user is given a series of long, random numbers called address and the second is a ‘private key’ that serves as the password for the user to view digital assets and access other transactions available in the system. These ensure all transfers including those involving monetary amount is digitally safe.
The system records complete data to its original user. Therefore, when a payment is transferred, the system automatically records the digital coins used for the transfer for the same tokens not to be used for another transaction. This generally helps avoid double spending even in cases when electronic files are altered and duplicated.
One of the disadvantages of modern technology are bugs, viruses, and malware that can damage computers, generate false data, and compromise the integrity of the transactions. Blockchain, however, has been proven to have a high tolerance to threats and malicious attacks. The blockchain ledger is immune even to the byzantine failure, which is considered as one of the most difficult types of failure modes where information saved are replaced with false data. The blockchain not just protects information but can also help save as much as 80% of the cost of having a cloud storage.
With the ever-changing ways of the world, we must be creative, strategic and adaptive to positive changes. Trying new ways to manage businesses and transactions won’t hurt, given that the decision came with careful planning and analyzing of the situation. This ensures business transactions such as money transfer are processed with convenience and ease between you and your suppliers, buyers, business associates, and remote workers.