Blockchain is regarded as one of the most efficient systems that can create radical changes in the world. It can change the traditional understanding of payment and money thoroughly, especially in banking and ecommerce with the help of its revolutionary system. Blockchain has been one of the most eminent investments of the era, in terms of putting out a technology that can make a breakthrough in communication and file sharing.
What is Blockchain?
Blockchain can shortly be defined as a distributed database allowing the action follow-up in encryption. It allows taking free actions without being connected to a center as it is a distributed database. Thanks to this chain system, a blockchain can be secured in the safest ways. Both the seller and the buyer can directly make transactions and the blockchain system secures all the actions.
Blockchain has such a high level of security that using it as a digital identity further in the process is already a heated debate topic. Therefore it is inevitable that the blockchain technology will be changing the Internet and our Internet habits from top to bottom. It is even possible to witness the impacts of blockchain differing from asset management, voting, prenuptial agreement to machine utilization. Banks, hospitals and governments may have to rebuild their working systems with blockchain.
How Does Blockchain Work?
Blockchain is a chain network where all the computers connected fundamentally to the system keep logs. Each transfer joins digitally into a cluster called “block” before it joins into this network. The transfer should be confirmed to be able to join the network. There are some criteria for this confirmation, too. After fundamental problems such as “Is there a real money?”, “Are the identities of the buyer and the seller real?” are confirmed, the transfer is made.
The traditional banking system, however, results in additional expenses, such as commision fees in monetary transmissions. These transitions are also relatively slower compared to the blockchain technology. Blockchain is, on the other hand, is a payment system that is fast, secure, transparent, cheap and even of zero error rate. As of lately, many banks and institutions offer new alternatives for their customers as they are benefiting from blockchain technology.
Uses of Blockchain in Crossborder Payments
Payment systems allowing payments and making transactions for firms that carry out Crossborder eCommerce and eCommerce operate through the mediators. In other words, every action results in additional mediation costs. Blockchain technology, on the other hand, eliminates the mediation costs and provides a fast, secure and cheap payment alternative. While it takes days or weeks for your money to reach the buyer in global money transfers used in traditional banking methods, instant transactions are possible with blockchain technology. Not only that these actions are all encrypted but also are of zero error rate as well.
The time of processing all the requests within the insurance industry is also considerably shortened thanks to blockchain. Choosing blockchain technology to prevent bad data, misrepresentations and fraud allow fast and explicit results for management in the insurance process. Mediators or other reconciliatory institutions that enter the picture in case of disputes at trading processes follow up the process through their own logs. However, these logs might be biased and inaccurate.
Each mediator and reconciliatory institution bring about new expenses; however, in the blockchain, every action requires an open and transparent log. This eliminates the need for any external mediators to take part in case of disputes. Smart contract applications that come with blockchain technology are among the most transparent and unbiased solutions to be used in such cases. The smart contracts that are coded like “Take X action in case of Y” function accordingly step in automatically when the coded case happens. In this way, mediators do not need to control if the actions of the parties to an agreement are in accordance with the agreement
In blockchain you can monitor transparently how the parties do their transactions, or whether they meet their obligations or not, and step in automatically. Smart contract technology can be used in every industry varying from the insurance to real estate and law.