Why Bitcoin is the MySpace of cryptocurrencies, but blockchain still exists
Cryptocurrencies emerged on the scene about a decade ago and continue to redefine the way we perceive and process financial transactions.
However, the real hero of this herald is not cryptocurrencies, but the underlying technology that makes cryptocurrency transactions as viable and efficient as possible - the blockchain.
The true potential of blockchain emerges when innovators and visionaries across industries begin to realize that it can be spun off from digital currency and used to revolutionize every other industry. As proof of its effectiveness, thanks to the integration of blockchain technology, businesses across thousands of industries experience amazing innovation as developers seize the opportunity to become creative with the versatility it offers force.
As more and more people embrace blockchain technology, some industries are beginning to be threatened by its existence and its disruptive nature.
While there is an understandable fear that Bitcoin could be just another financial bubble; MySpace of cryptocurrencies, if you will, the real loss will be if the blockchain doesn't live up to its promises.
The million dollar question then becomes, will blockchain be here to stay? To be able to answer this question, we must first understand the psychology of blockchain:
1. The benefits of full disclosure
That was, and still is, one of the technology's biggest selling points -- full disclosure. A blockchain is a large-scale public ledger of every user's activity across a broad network.
The fact that every user activity on the blockchain (in the case of cryptocurrencies, its verified financial transactions) can be monitored and traced back to its origin makes it ideal for many other uses, such as in the case of supply chains .
Transparency breeds authenticity. When every blockchain user can see exactly what is going on, it helps keep everyone honest. This feature is probably the biggest reason why initial coin offerings (ICOs) are all the rage. ICOs have been successful since their inception in 2013, and they have scored some headline-worthy victories to encourage every would-be investor, regardless of budget, to join and receive a piece of the crypto pie.
2. Control your finances without compromising your security
We cannot leave all our money at home; financial institutions exist to help us facilitate financial management and control for individuals and businesses.
But how much control is too much? In a world of rapid development, technological innovation and flexibility, people are increasingly dissatisfied with the traditional services of these well-established institutions because of their strict policies.
They decide everything: minimum account balance, maximum and minimum transaction value, transaction fees, credit advances, collateral value, allowed payment methods and a plethora of other conditions.
Plus, these institutions can make bad investments and lose money - their clients' money. The blockchain decentralized structure advocates returning control to customers, letting them host their own financial decisions.
While banks do work hard to keep customers' funds safe, this often means that customers have to seed the bank with a lot of financial control. The full disclosure and authenticity features of the blockchain give its users confidence in the security of their money and financial transactions.
The ledger itself may be public, but the data on the blockchain is verified and encrypted with advanced cryptography, which makes it more difficult to hack and has no third parties to minimize interference and ultimately reduce the risk of hacking .
Then there are offline crypto wallets, just in case you feel more secure to store digital currencies offline. This year alone, banks have recorded relatively dire data security breaches, with the financial sector accounting for 14% of the total breaches recorded in the first half of 2017.
Blockchain is still in its infancy and it does have flaws, but it has proven to be a more secure technology to keep our funds safe. It's no wonder that many banks and major financial institutions (about 15% are expected this year alone) have begun integrating the technology to better serve their customers.
3. Expenditure costs
Financial institutions act as intermediaries for our currency transactions; they help us send and receive money, and properly charge for their services. This is one of the highest revenue generating methods for financial institutions. While most of these agencies, in their various forms, have attempted to implement a more flexible approach to charging for services in recent years, many feel that the cost of these services is still too high.
Card processors like MasterCard, Visa, and Discove collect anywhere from 1.44% to 2.6% per transaction (plus a fixed amount usually no less than $0.25). .. If you're sending $100, that's about $2.60 plus $0.25 or $2.85.
That might not seem like much, but for the millions of merchants using these processors, receiving thousands of dollars in payments quickly started to add up. Paypal transaction fees are 2.9%, plus $0.35 per transaction for personal accounts and 4.4% plus $0.30 for business accounts.
Historically, blockchain transaction fees have been much lower than other established payment mediums - less than a penny as recently as 2015. As demand for Bitcoin and other cryptocurrencies has increased, so have service fees.
While day traders protect themselves from trading losses by using order types, major blockchain wallet companies have adopted flexible and dynamic payment structures that allow wallet users to choose their own fees to reduce extraneous losses.
This also comes with dynamic fee estimates that help them choose the fee that guarantees the fastest transaction speed. This level of user control is definitely a very flattering quality that will likely become more accepted in the years to come.
There is an added advantage that clients no longer have to bear the financial shock of conflict between these traditional financial heavyweights. Additionally, merchants can deal directly with customers on the blockchain, effectively getting rid of any intermediaries and getting full value for their sales.
4. Blockchain technology is infiltrating other industries.
The technology was originally intended to be the benchmark protocol for future financial transactions and nothing more. However, as the industry begins to realize the potential of this innovation, not only can funds be transferred, but extensive research can be undertaken to better understand and integrate it.
Today, you'll find signs of blockchain infrastructure in every major industry, as developers frantically seek to make it better, faster, more secure, more user-friendly and more adaptable.
And it doesn’t stop there; startups are popping up quickly, everywhere, focused on using blockchain to run their businesses. For example, Gaming Protocol is a blockchain-focused development platform for the gaming industry. IMMLA is a freight forwarding company built around blockchain technology. I've come across a lot of blockchain-focused companies that are literally pulling out the middleman in their industry.
This wave of industry disruption is expected to continue because of the potential for longevity of any technology with such flexibility. We can only wait and see how it will be used to expand the effectiveness of other already promising technological innovations such as the Internet of Things.
So, is blockchain just another tech fad?
Hard to say. In addition to all the benefits outlined above, blockchain is slowly changing the way we do business, the way we make a living, and the way data is available. Blockchain has its fair share of problems, and despite its great success, blockchain has its limitations that we may need to worry about.
For now, however, blockchain is making steady progress. With all the benefits that blockchain has to offer, it certainly has a lot to offer to boost the confidence of potential users. The world is changing every day, and blockchain is being tested in each case to determine its ability to withstand future challenges.
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