Blockchain’s rapid progress is showing no signs of slowing down, it’s still actively being in the spotlight. Even though there are some mixed feelings toward this technology, yet no one can entirely underestimate its role in the global economic landscape. Blockchain has been opening new business models based on the token economy thanks to its outstanding features
Once a transaction is recorded, its authenticity must be verified by the blockchain network. Thousands of computers on the blockchain rush to confirm that the details of the purchase are correct. After a computer has validated the transaction, it is added to the blockchain block. Each block on the blockchain contains its own unique hash, along with the unique hash of the block before it. When the information on a block is edited in any way, that block’s hashcode changes—however, the hash code on the block after it would not. This discrepancy makes it extremely difficult for information on the blockchain to be changed without notice.
This principle applies at many levels, including transactions and algorithms. The first one is Traceability and auditability of the entire chain of transactions: The publication of all transactions recorded from the Genesis Block enables all nodes to verify the integrity of the chain and obtain all the transactions associated with an account. In theory, fraud is therefore impossible: all is public and transparent, in the limits provided by pseudonymity. The second one is Algorithmic transparency: Anybody can read the code used for mining, interacting with the blockchain and implementing a smart contract. This gives experts among the user community the opportunity to scrutinise the code and raise a red flag if they notice anything suspicious.
Trust relies on a decentralized architecture, with a large number of nodes belonging to different organizations. Unlike in a centralized architecture where decisions can be taken without consensus, one needs to either produce some level of consensus or control more than 50% of the nodes (or the computing power) to act on the system as a whole. Since the architecture relies on many nodes, the work of validating and storing transactions in the blockchain, as well as any updates to the rules governing the blockchain, need to receive consensus from a broad group of stakeholders, thus forbidding a small group to become too influential in the governance mechanisms.
Blockchain allows businesses to cut the middleman’s cost and simplify business operations. For example: By removing the middleman and asset rights transfer, blockchain lowers the asset exchange fees and reduces the instability of the traditional securities market. According to one source, moving securities on a blockchain could save from $17 to $24 million each year in global trade processing costs.
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