Blockchain Technology Role in Cryptocurrencies Essay Sample

This essay sample would provide insight into blockchain technology and its role in cryptocurrency. A cryptocurrency is a digital medium of monetary exchange that uses encryption techniques. The best-known cryptocurrency is bitcoin. Blockchain technology was invented for Bitcoin. Further, in this article, we would study blockchain interoperability, challenges, and the latest development. Let’s dive in!

Blockchain Technology 

It can be defined as a structure used for storing transactional records known as a block. Blockchain Technology uses several databases to store public records known as the chain.

This technology is widely used in cryptocurrency. A verified transaction can occur in a blockchain involving cryptocurrency. The exchange of monetary units can be done by verifying the fund’s transfer. The financial transaction is stored and created electronically in the blockchain. It is a permanent ledger that helps in cost reduction.

Applications of Blockchain Technology 

There are various applications of blockchain technology than bitcoin and cryptocurrency. Blockchain technology saves money and time while maintaining operations transparently.

The common blockchain applications to know are

• secure sharing of medical data
• cross border payments
• personal identity security
• supply chain monitoring
• cryptocurrency exchange
• anti-money laundering system
• voting mechanism
• Tracking of music royalties
• Advertising insights
• Real estate processing

Challenges

According to many people, blockchain technology is still directly connected to cryptocurrency only.

• Blockchain is a digital method and is directly affected by hackers, speculators, and fraudsters.
• Lack of scalability
• technicality problems such as computer systems being slow
• lack of blockchain developers
• lack of interoperability

Blockchain interoperability

It is a concept to make two blockchains work together. Blockchain interoperability is the method of information sharing across blockchain networks and systems.

Need for blockchain interoperability

There is a need for blockchain interoperability because of its following benefits.

• Developing partnerships within blockchain systems
• Easy execution of monetary contract
• Cooperation on the enterprise development and easy sharing of solutions
• smooth message sharing across all blockchain systems
• Help IT, staff, in developing knowledge regarding prominent blockchain standards

Latest developments on blockchain interoperability

Due to the significance of blockchain interoperability, there are many latest developments. The coronavirus pandemic has shown the essentiality of blockchain for accessing and sharing information across the networks.

Independent blockchains are now used in the Cosmos network. New zones can connect to the network for exchanging information across standardized protocols.

Blockchain interoperability helps in mitigating supply chain issues. It can provide a complete audit trail of data used in the supply chain. All blockchain transactions are secured, tamper-proof, and timestamped. It enables peer-to-peer interactions based on digital signatures. Therefore, it helps in providing Data integrity.

Blockchain interoperability strategies

Blockchain Technology is used across the public sector applications and businesses. It is used in financial transactions, automated customs clearance, and tracking in supply chains. however, This technology is built on 4 key elements. First is hash functions and digital signatures, second is a peer to peer network and distributed ledger, third is consensus algorithms, and lastly smart contract.

Transparency: Transactions in blockchain are transparent. Since blockchain technology is a distributed digital ledger, the identity of the user remains secure. For example, they provide accurate tracking of shipments in the supply chain.

Immutable: All the users in the blockchain have direct access to the transactions. The records are immutable to all users. Hence, this technology provides security because of access to records at every node.

Decentralization: The problem of data leaking is solved through decentralization. There is always a middleman that helps in data privacy. There is no single host of the sender information.

For example, in the voting process using blockchain code voters can cast votes through smartphones resulting in immediate results. In financial services, blockchain technology can provide cheaper and faster financial settlements. It can save millions of transaction costs while maintaining transparency.

Conclusion

Despite being a new technology, blockchain has already made its path across various organizational and department verticals. We have covered the concept of cryptocurrency, blockchain, and interoperability.

therefore We also saw its applications and challenges faced by it. To get ahead with the technology, organizations need to experiment and evaluate by employing it across the department. Hope you found the above article on blockchain inspiring.

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