Bitcoin and blockchain, the system that underlies it, are massive technological innovations that promise to change the world of finance in general. The traits that make them tick are radically different from our traditional understanding of how industries like banking operate.
However, how much of a potential Bitcoin and blockchain have to change the way we handle money?
Quite a lot, it would seem. Although the overall concept would remain the same, most procedures would be greatly streamlined.
Bitcoin can be transferred between two distant entities much more quickly than traditional money can. An international money transfer may take up to 5 days to complete. Various problems can arise that slow down the process, like holidays or plain old human error.
Conversely, an average Bitcoin transaction can be done in 20 minutes, though some limits like how many transfers the Bitcoin network can handle in one second and block prioritization may hinder it.
Bitcoin is decentralized, meaning that there exists no central authority to keep transfers going. Traditional financing, however, must rely on intermediaries (i.e. banks) to move the money. Employing the services of all these middlemen costs a considerable sum of money, and blockchain has a way to avoid this cost altogether.
Any transfer you do on blockchain is irreversible and difficult to hack. That’s because data on blockchain gets stored on many “blocks” throughout the network. For a hacker to get his hands on your money, he would have to tamper with all of these blocks, which is exceedingly difficult. This makes blockchain considerably safer from fraud and theft than regular financial platforms.
Another great innovation within blockchain are smart contracts. Smart contracts are virtual protocols that act as self enforcing agreements with no third party intervention.
In other words, they’re contracts that automatically define and enforce their rules, as well as terminate once all conditions have been met. These contracts can further cut costs for financial business like lending, payments, and so on.
That’s all well and good, but what does it all mean?
The way Bitcoin and blockchain work will, if properly implemented, significantly reduce costs of transferring money from one place to another. Some predictions claim that banks may save upwards of $20 billion by using blockchain.
Individuals get to reap the blockchain benefits too, because they get to save time and money otherwise spent rounding up the paperwork, wasting time in endless lines, or waiting for financial intermediaries to do their thing.
Beyond that, Bitcoin and blockchain make any kind of foul play much harder to go by unnoticed (if at all). There’s simply too much for a cyber attacker to wade through to breach blockchain security.
As time goes on, it only becomes more clear just how much Bitcoin and blockchain can impact the world we live in. That makes it all the more important for people to learn more about both. Luckily, doing that is not so difficult – you needn’t go much farther than the Bitcoinfy’s infographic below.
This handy guide is a real treasure trove of insightful info on everything you need to know about Bitcoin and blockchain. And to make things better, it’s all presented in a clear, reader-friendly fashion, so there’s no fear of dense paragraphs or indecipherable jargon.