Since the time money has been used for transactions, we have relied on organizations like banks and financial institutions as well as the government in order to authenticate, verify and validate our transactions. These are intermediaries who build trust in a transaction and who ensure that a record is maintained of the transactions conducted on a daily basis. While physical money and documents were still easy to record and maintain, digital transaction where digital money, and digital files are concerned makes it even more difficult for us to authenticate and validate. The need for intermediaries who can authenticate and validate digital transactions was extremely important because digital assets stand a higher chance of being replicated. It leads to the problem of double spending where the same unit of money is used more than once.
But more so, what if we were able to transact and create contracts without the intervention of intermediaries at all and still maintain the authenticity of the transaction or the contract?
Interesting as it sounds, the technology for this didn’t exist a decade ago. But Blockchain is finally here and it can make such things possible. The technology is yet to completely mature and it is still in the process of trials by many companies. If we are able to find a way in which the limitations of Blockchain can be reduced and it can be made mainstream, transaction costs may go down invariably and the global economy may see a huge transformation.
The world was first introduced to Blockchain through Bitcoin in a 2008 white paper that was authored by a person or a group which goes by the pseudonym Satoshi Nakamoto.
Nakamoto talked of a technology that used a peer to peer electronic cash system which was termed as Bitcoin. It removed the need of intermediaries completely from the system and allowed for payments to be made directly. Lots of people had their reservations about it when Bitcoin was introduced. But it also caught the attention of technology enthusiasts who found the decentralized system of payments to be exciting and innovative. While the Bitcoin was an amazing development, it was the mechanics behind it that garnered a lot of popularity and was truly radical.
People began to realize, that it wasn’t Bitcoin that was the most attractive part of the white paper release. Blockchain was far more revolutionary and had more uses than the digital currency with which it was discovered. Bitcoin is most commonly associated with Blockchain perhaps because it was first application to have used the technology. Today, the technology is used by many other altcoins and has many companies from different industries using the technology too. Its popularity grows with the growing reach of the internet and has more relevance today than in 2008 when it was first used.