Cryptocurrencies! The new trend in town everyone’s been hyped up about. Even before we get to what a cryptocurrency ledger is, let us start with some quick definitions; Blockchain is the technology that makes it possible the existence of cryptocurrencies. Perhaps, because of its popularity, when a person says the word cryptocurrency, our brain automatically switches to Bitcoin. Cryptocurrencies, just like gold or silver are mediums of exchange, the only difference is that the ‘Bitcoin’ mode of exchange is digital and uses complex encryption techniques to control the creation of these digital assets and to also verify the transfer of funds.
What is a Cryptocurrency Ledger?
The cryptocurrency ledger is a mechanism that allows information about these digital assets to be globally distributed but never copied. In the past, the way we would operate is that we’d have to first do the work say in a “word” document, save it, attach it as an email and then send it in order for other people to review the work. Even though this is practiced today in so many ways, if you think about it, the process is cumbersome. If a change was to be made to that work, it changes everything and it had to be resaved, reattached, and then resubmitted for further review.
Assuming that you are working with huge files and hundreds of projects and a large number of end-users who need to review this work, you can imagine how confusing this whole project would be. In order to save people from the hustle, we have seen companies like Google come up with a collaborative suite to help ease this process. This is the same way that Blockchain technology works. Apart from the cryptocurrency ledger being easier for the end-user, it has other many advantages.
The cryptocurrency ledger technology is a decentralized ledger of all the transactions that occur in the peer-to-peer network. With this technology, the participants can confirm transactions without ever needing to clear with any authority.
What’s the Point of a Cryptocurrency Ledger?
From the business point of view, we need to look at blockchain technology as the next-generation business process improvement software. Technologies like cryptocurrency ledgers enhance the collaborative aspects of the business and promise the ability to improve the business processes while lowering the cost of trust between these companies. This means that overall, the cryptocurrency ledger has significantly higher returns for each investment dollar than most traditional internal investments.
Most financial institutions are thinking of ways to use the cryptocurrency ledger to upend everything, including minor details such as clearing and settlement to insurance. This affirms that they have seen the many advantages that come with this technology.
But what are the ‘real’ tangible benefits to this technology?
Increases Transparency
One of the main areas where the cryptocurrency ledger is winning the hearts of many people is the trust issue. Blockchain’s greatest characteristic comes from the fact this ledger is open to anyone for viewing.
The cryptocurrency ledger could be very useful especially in the financial systems and businesses since it adds an additional layer of accountability when businesses feel the pressure to be accountable, integrity is increased which promotes the overall industry to act responsibly and honestly.
The Cryptocurrency Ledger increases Efficiency
Remember blockchain technology is a decentralized technology. This means that there is no need for the middlemen {brokers)in many processes as we see in the traditional business setup of payment. When compared to this archaic form of payment, blockchain offers faster transactions by allowing P2P cross-border transfers with a digital currency. For instance, in the real estate industry, cryptocurrency ledger technology makes processes much more efficient since there is a unified system of ownership.
Increased Security
When compared to most other systems, the cryptocurrency ledger is far more secure. New transactions are encrypted and linked to the previous transactions. Just as the name suggests, blockchain is formed by a network of independent computers that come together to confirm a block. This block is then added to the cryptocurrency ledger. This eventually forms the chain.
The behind the scenes computations of the Blockchain are very complicated and involves a string of mathematical numbers and are impossible to be altered once they have been generated.
The decentralized nature f the blockchain gives it the quality of being trustless which means parties do not have to trust each other to transact.
Bottom Line
Given the many uses of blockchain technology, I can confidently say that this technology is here to stay. It is a really flexible technology and can be applied to a multitude of industries which makes it extremely popular.
