Bitcoin enigmatically appeared in the Internet. Satoshi Nakamoto, its unknown originator, used blockchain technology in order to create Bitcoin.

Blockchains are democratized “public” ledgers. Ledgers are the recordkeeping books that accountants and bookkeepers typically use. Thus, blockchains are one method of record-keeping.

Because blockchain is public, everyone can access it. Democratized means there is no single institution that administers the recordkeeping– there are many.

Conventional banking system

If a person in Dubai were to send remittance to the Philippines, their bank would first verify their identity and confirm that they received money to be sent to the Philippines. The bank in Dubai would then contact the Philippine bank to send the value requested.

The Philippine bank undergoes a similar process of verifying that money was received and that the recipient exists and is who they say they are. This process of record-keeping requires people and technology and incurs costs. The remittance sender is typically charged a fee and the remittance receiver often receives less than what was sent to cover these costs.

Banks act as middlemen in financial transactions. With this role, they charge fees which is expensive especially to low income groups, the majority of the population.

In the case of blockchain, there is no need to go through banks. It eliminates these expensive middlemen and allows direct transactions with anyone who have access to the technology.

Recordkeeping

To ensure correct recordkeeping, multiple devices are used in the blockchain around the world in anetwork. They simultaneously record and verify the transaction.

If even a single of these devices in the blockchain were not to match, then the entire transaction would be invalidated because it is no longer consistent is the network. This prevents fraudulent recordkeeping to occur and upholds the integrity and accuracy of the network.

Blockchain is efficient

Using blockchain through the internet, the middleman is eliminated, and transaction fees would be reduced. It would be a cheaper system compared to the current system of incurring bank fees.

Blockchain keeps your privacy

Typically, banks require proof of identification in order to proceed with transactions. This makes transactions traceable in order to prevent money laundering and financing of terrorist activities.

Contrary to conventional banking, blockchain is anonymous. The anonymity of blockchain means that there is no need to furnish proof of identity, as the blockchain goes through its own verification method.

However, scammers and criminals were the first to take advantage of the anonymity of cryptocurrency transactions. This resulted to many cryptocurrencies linked to illicit financial transactions that continues to paint cryptocurrencies in bad light.

Use of blockchain

Cryptocurrency is just one use of blockchain. As a secure, efficient, and tamper-proof method of recordkeeping, blockchain can be used to verify any type of interaction. Its uses could range from government use, insurance, international trade, health care, and real estate, etc.

Admittedly, blockchain is a very powerful technology that could be used for social good. However, when used by the wrong hands, it could also be equally used to the detriment of society.