The blockchain is currently mainly used in trading. Because of this technology people in the world are free to trade with anyone either they know each other personally or not. There is no need for any intermediate party like banks and government bodies. Bill Gates and Richard Branson are its admirers among others. Banks and other financial institutions are competing with one another to be first to work out on it. For example, when you buy a smartphone from e-bay, you ideally do not want to have an intermediary.
Currently, most of the people use a trusted intermediary such as banks to make their transactions. Blockchain provides a decentralized database to the consumers that everyone can see on the network. The network consists of computers in a chain called nodes. They all have the complete history of transactions that took place on that network. Information is spread all over the network. Whenever a transaction takes place, this is endorsed by everyone and written down in the history of transactions of that network. A technique called cryptography is used for the encoding of the transactions.
Most of the people take blockchain technology only linked to the bitcoin, which is simply a misconception. Bitcoin uses it but conducting secure trade is only one of the endless possibilities it offers. Bitcoin is merely a digital currency.
Blockchain stores the details of all the transactions of the digital currency in case of the bitcoin. An error occurs in the technology if the same bitcoin is spent more than once.
For almost every type of transaction this technology works, involving value, goods, and property money. Potential uses of this technique are practically limitless. Where banking is complicated, it collects taxes to let migrants send money back to their families. One of the core benefits of using the blockchain technology is it also helps in the reduction of the fraud cases because every transaction made is recorded and distributed on the public archive for anyone to see.
If blockchain goes mainstream, anyone having access to the internet would be able to use it for conducting transactions. According to the survey of the World Economic Forum’s Agenda Council, currently, only a tiny proportion of global GDP is held in the blockchain. To speed up settlements and to cut costs the bankers insure, the tech firms are working to ensure more of the transactions are conducted using the blockchain technology. The bank of Canada is also doing some experiments on this technology. Companies are racing to get to use blockchain including UBS, Microsoft, IBM, and PWC. This revolutionary wave is famously called as web 3.0 all around the internet. Everyone is talking about bitcoins, blockchains, and cryptocurrencies.
Tell your child about the implications of this technology and the potential that it holds to impact so many industries.