The role of blockchain and decentralization in the digital economy
The world continues to change and move forward thanks to technology. It has become quite convenient for communicating, traveling, building, among other things. Looking back over 21 years, technology has changed great industries and created new businesses. To provide infinite consumption for humanity, the global economy is always inflated and must continue to do so for the next 100 years or more. There is a need to revolutionize the global economy, which is possible thanks to Blockchain technology. According to an analysis made by PwC, it can increase global gross domestic product by $ 1.76 trillion within the next decade.
Blockchain technology was first described as an idea in 1991. Researchers Stuart Haber and W Scott. Stornetta introduced computerized digital time stamping so that they cannot be tampered with or backdated.
In the following years, many prototypes were seen. However, in 2008 Bitcoin emerged. Satoshi Nakamoto (Anonymous) is credited for the Bitcoin cryptocurrency creation. For the implementation of the Bitcoin white paper, Nakamoto developed the first Blockchain database.
What is blockchain?
It consists of blocks that are linked to each other by cryptography. This chain keeps growing and creates a list of records. Each block is connected to the previous block via a cryptographic hash, timestamp, and transaction data.
Blockchains cannot be tampered with once their data is saved because no block can be changed without triggering the altercation of all subsequent blocks. Pips in blocks known as pitchforks could be seen as brief altercations. They appear when the two entities involved in the creation of the data block do not agree on the decided protocol.
Through peer-to-peer networks, blockchains are used as publicly distributed ledgers. The nodes are collectively linked to a protocol, where they communicate and validate new blocks, new data. Therefore, the blockchain, which is related to the following protocols and blocks, is considered secure.
Nakamoto actively solved the double-spending problem without the need for central server authority or oversight. The blockchain is considered a “payment rail”. The decentralized, distributed and often public digital ledger is used to record transactions on many computers. With the security of any malicious altercations, participants can verify and audit transactions on their own at low cost. As a result, just like its creator, Nakamoto, the blockchain is also managed autonomously.
How is the Blockchain connected to the digital economy?
Economic transactions made over the Internet are part of what we call digital economies. Thanks to globalization, the traditional economy of going to banks or buying in stores has now moved to the digital space of online banking, shopping, reselling, etc. The traditional model of economic transactions requires a real presence and is seen as a tedious process. The digital economy, on the other hand, has made it easy for millions of people to transact without the appearance of a single click.
Through the trends of the last decade, the digital economy has been successful in terms of business, culture, media, etc. This online economy has also allowed major tech companies to become unicorns. Since Blockchain and the digital economy are based on technology, the two are already linked to each other.
Blockchain technology has multiple applications. However, it is mainly used as a distributed ledger for crypto-currencies, famous bitcoin. Many companies are currently testing this technology. It is also implemented on a small scale to assess its effectiveness.
Blockchain-based smart contracts are also on the way. These contracts are free from the interference of intermediaries who act as trustees for the authorized contract signatories. Just like distributed public registers, private registers are also under construction. Banks will then use these private distributed ledgers to speed up their back-office settlement systems.
What about cryptocurrencies?
Cryptocurrencies are legal in some countries and illegal elsewhere. Many tech giants regard cryptocurrencies as a valid token and therefore are widely accepted in Western markets. A growing number of governments are analyzing the benefits of adopting them more broadly.
But, unlike the world’s currencies regulated by their respective governments, cryptocurrencies are decentralized – which is frankly a good thing, one might say. Additionally, cryptocurrency can be viewed as volatile in our digital economy. When converted into the currency of its country, the value of an encrypted coin changes every day. Since it is considered to be at an unstable tangent, there is some time before it can be accepted more carelessly.
What is the future of the Blockchain?
With blockchains, decentralized digital platforms for buying, traveling, renting, reselling, etc., are expected to become abundant. The concept not only benefits the businesses that use it, but also ensures strong consumers by creating secure transactions.
Blockchain technology is decentralizing the digital economy through cryptocurrencies and smart contracts. Of course, it can also be used to create recordings. In terms of data storage and building web servers, it maximizes data security. It is also being developed to create easier banking transactions. It can be used in healthcare, digital marketing, education, etc. There is so much to live
While governments may question the legality of cryptocurrency, it cannot be denied that blockchain technology as a whole is of great interest to them as well. Blockchain can cast and count votes and make the electoral process more accountable by being transparent. It already permeates the management of the political, legal and judicial spheres. Blockchain can also secure defense, more importantly, intelligence agencies through distributed private ledgers.