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What is blockchain?
Blockchain is the term used to describe an indelible ledger stored online, which records the details of every cryptocurrency transaction made globally in real time.
The system is known as peer-to-peer technology because every computer logged into the blockchain network approves each transaction and receives a copy of the details of that transaction, making the risk of fraud currently almost negligible.
Why is it called Blockchain?
Blockchain was the term used by the inventor of the original and first cryptocurrency,Bitcoin.
The inventor of Bitcoin and Blockchain is known as Satoshi Nakamoto, but the identity of this individual has never been revealed. However, they refer to Bitcoin and Blockchain as “A Peer-to-Peer Electronic Cash System.“
The system of payments being recorded in real time takes the form of a chain, with each new payment being given a hash number – for example, 00001#, 00002#, etc – so that each transaction refers to both the previous one and the subsequent one.
It is this digital chain of transactions which makes it extremely difficult to commit fraud, as ifany changes are made, the number sequence is affected.
The fact that each payment transaction also has to be “approved” by every computer logged onto thenetwork at the time also protects the chain from external interference.
Why is Blockchain different from normal banking transactions?
Where as payments made via banks and other financial institutions are subject to the regulatory requirements of those institutions, as well as government interference, Blockchain is a completely autonomous and independent payment system existingonly digitally – ie in cyberspace.
This allows users to make payments freely and cheaply without any potential blocks by the payment provider, such as a bank. Users choose when to make a payment using cryptocurrency and how much to pay – and are able to use different cryptocurrencies to pay for goods, services and even property.
Is Blockchain secure?
The chain technology, in which each payment made refers to the previous payment and subsequent one – and which also has to be approved by all the computers on the network at the time – has proved to be highly secure, and possibly the most secure way of making payments online.
Users can also remain anonymous – cryptocurrency is stored in online “wallets” which are anonymous, so the identity of the user is not known. This causes concern because of law enforcement – and cryptocurrencies and Blockchain have attracted small criminal elements to the system simply because it is a secure and anonymous system. The only other thing with being anonymous you do have tocreate an account on each crypto trading platform i.e. coinbase, binance,kucoin etc. You have to create an account with your details in, so the account will be registered to your name, just its not something that’s easy for the government to go in to. The cryptocurrencies that are inside your wallet whether its on your wallet on the exchange like binance, or another online crypto storage like metamask are safe, but still do come with some risk of hackers etc, this is why it is best to store your cryptos on an offline ledgar.
However, it is so technically difficult to change the record of payments once they have been logged without attracting attention that Blockchain is considered one of the most secure – if not the most secure – payments system available.
Is Blockchain faster than normal payments systems?
One of the main attractions of cryptocurrency payments and Blockchain for users is the fact that payments can be considered almost instantaneous, compared to traditional banking systems.
It is estimated that payments using cryptocurrency and Blockchain are around ten times faster than traditional banking payments – and with cryptocurrencies such as Ripple XRP positioned to compete with the SWIFT banking system, it is likely that the technology will become even more efficient and secure, as the technology and adoption rates by users grow.
Are there disadvantagesto Blockchain?
There are stillmany who doubt that cryptocurrencies and Blockchain will turn out to be the new universal way of banking.
Compared to banking systems currently in place, Blockchain may still be in its infancy. The technology was only unveiled in 2008, but cryptocurrencies and Blockchain have so far defied the doubters to provide a new, secure and efficient way of handling digital payments globally – and without the need for regulation orgovernment intrusion, paving the way for an innovative but decentralised peer-to-peer payments system that anyone with some computer skills can use.
The block -
With the block it contains data, the hash and the hash of the previous block.
The data stored inthe block depends on the type of blockchain. The hash can be looked at like a finger print - it identifies a block and all of its content and its also unique, if the has inside the block changes this is when a new block will get created.
Blockchain vs. Banks
Hours open
- Typical brick-and-mortar banks are open from 9:00 am to 5:00 pm on weekdays. Some banks are open on weekends but with limited hours. All banks are closed on banking holidays.
- No set hours; open 24/7, 365 days a year.
Transaction Fees
- Card payments: This fee varies based on the card and is not paid by the user directly. Fees are paid to the payment processors by stores and are usually charged per transaction. The effect of this fee can sometimes make the cost of goods and services rise. •Checks: can cost between $1 and $30 depending on your bank. •ACH: ACH transfers can cost up to $3 when sending to external accounts. •Wire: Outgoing domestic wire transfers can cost as much as $25. Outgoing international wire transfers can cost as much as $45.
- Bitcoin has variable transaction fees determined by miners and users. This fee can range between $0 and $50 but users have the ability to determine how much of a fee they are willing to pay. This creates an open marketplace where if the user sets their fee too low their transaction may not be processed.
Transaction Speed
- Card payments: 24-48 hours •Checks: 24-72 hours to clear •ACH: 24-48 hours •Wire: Within 24 hours unless international *Bank transfers are typically not processed on weekends or bank holidays
- Bitcoin transactions can take as little as 15 minutes and as much as over an hour depending on network congestion.
Know Your Customer Rules
- Bank accounts and other banking products require "Know Your Customer" (KYC) procedures. This means it is legally required for banks to record a customer's identification prior to opening an account.
- Anyone or anything can participate in Bitcoin’s network with no identification. In theory, even an entity equipped with artificial intelligence could participate.
Ease of Transfers
- Government-issued identification, a bank account, and a mobile phone are the minimum requirements for digital transfers.
- An internet connection and a mobile phone are the minimum requirements.
Privacy
Bank account information is stored on the bank’s private servers and held by the client. Bank account privacy is limited to how secure the bank's servers are and how well the individual user secures their own information. If the bank’s servers were to be compromised then the individual's account would be as well.
Bitcoin can be as private as the user wishes. All Bitcoin is traceable but it is impossible to establish who has ownership of Bitcoin if it was purchased anonymously. If Bitcoin is purchased on a KYC exchange then the Bitcoin is directly tied to the holder of the KYC exchange account.
Security
Assuming the client practices solid internet security measures like using secure passwords and two-factor authentication, a bank account's information is only as secure as the bank's server that contains client account information.
The larger the Bitcoin network grows the more secure it gets. The level of security a Bitcoin holder has with their own Bitcoin is entirely up to them. For this reason it is recommended that people use cold storage for larger quantities of Bitcoin or any amount that is intended to be held for a long period of time.
Approved Transactions
Banks reserve the right to deny transactions for a variety of reasons. Banks also reserve the right to freeze accounts. If your bank notices purchases in unusual locations or for unusual items they can be denied.
The Bitcoin network itself does not dictate how Bitcoin is used in any shape or form. Users can transact Bitcoin how they see fit but should also adhere to the guidelines of their country or region.
Account Seizures
Due to KYC laws, governments can easily track people's banks accounts and seize the assets within them for a variety of reasons.
If Bitcoin is used anonymously governments would have a hard time tracking it down to seize it.
