What could power the future tech?

What could power the future tech?

A blockchain is a distributed database or ledger shared among nodes. As a database, a blockchain stores information electronically in digital format. Blockchains are essential for cryptocurrency systems, such as Bitcoin, to maintain a secure and decentralised record of transactions. In addition, blockchain innovation guarantees fidelity and security of data descriptions and generates trust without needing a third party.

What are the Benefits of Blockchain in Finance?

The Ethereum blockchain enables more open, inclusive, and secure business networks, shared operating models, more efficient processes, reduced costs, and new products and services in banking and finance. It enables digital securities to be issued within shorter periods, at lower unit costs, with greater levels of customisation. Digital financial instruments may thus be tailored to investor demands, expanding the market for investors, decreasing costs for issuers, and reducing counterparty risk. 

According to a report by Jupiter Research, blockchain deployments will enable banks to realise savings on cross-border settlement transactions of up to $27 billion by the end of 2030, reducing costs by more than 11%. Ethereum has already demonstrated disruptive economics, creating over 10x cost advantages against incumbent technologies. Financial institutions acknowledge that distributed ledger technology will save billions for banks and major financial institutions over the next decade. 

The recent government stance against cryptocurrency has had a significant impact on the growth of blockchain processes. This move is in response to the fact that cryptocurrencies’ underlying technology does not allow any central authority for any transaction; the government cannot regulate the monetary policy and loses its power. 

However, it is hard for the government to enact such a ban on cryptocurrency. Theoretically, they can declare it illegal and enact policies. You can call it an asset, a commodity, a currency or a security. But fundamentally, cryptocurrency does have value and liquidity. There are hundreds of millions of people around the world who are willing to hold cryptocurrencies. If there is an agreement, it acts as a medium of exchange.  The government could always create barriers to entry. However, if mainstream users cannot trade on exchanges, they will look for alternative means. Transferring crypto can be as simple as sharing a movie on a USB thumb drive. So, people could technically just find someone willing to transfer the fiat equivalent of a particular amount of cryptocurrency to their bank account. In simpler words, the black market trading of crypto. 

In the days before exchanges, this was as easy as being active on popular crypto forums, and the same should be true now as well. Sellers can sell to anyone in any country, as long as they get the flat equivalent in a currency they want.

Experts say that public blockchain-based products may become impossible to create if a ban is imposed. Essentially, if the government says that you can’t use cryptocurrency, then the entire blockchain behind that also becomes illegal. Or at least that’s what many speculate will happen.

If this move is enforced, it could damage innovation for the blockchain industry, which will essentially have to develop its blockchain platforms from scratch, which costs much more money and time. Counterproductive to the systems in place today, this move hampers growth in the sector.