In preparation for her summer trip, seventh-grader Dharani Purushottam tackled today’s rudimentary currency exchange process. Her father’s comment sparked her curiosity about blockchain. Delving deeper into this subject, Dharani writes about the role of blockchain in changing the way transactions are done today.
Visiting new places, meeting new people and enjoying local cuisine are some of my favorite things to do on vacation. In preparation for my summer vacation trip, I accompanied my father to the bank to collect foreign currency.
I was intrigued by how currency exchange works and how we don’t usually carry dollar bills.
During the process of collecting foreign currency, my father said something that bothered me.
My father believes that by the time I become an adult, I may not have to deal with such a conversion.
During the passionate discussion, we learned about a technology called “blockchain.” A technology that could completely change the way money works today.
What is blockchain?
Think of blockchain as a special kind of digital notebook that keeps records. Rather than just one notebook, it’s like a huge chain of linked notebooks (or “blocks”). Each block holds a large amount of information, such as transactions (exchanges of money, etc.). When one block is full, it is connected to the next block, forming a chain of blocks. This is where the term “blockchain” comes from.
Interestingly, Satoshi Nakamoto is believed to be the founder of blockchain technology, but his identity has not yet been fleshed out.
inner workings
New information, such as electronic money purchases, is first put into a new block. Before adding this new block to the chain, the “miner” verifies that the information is correct. Miners verify blocks by solving math problems. You can check whether the new block is compatible with the previous one.
Depending on whether the block is compatible or not, the transaction is either verified by the miners’ consensus and added to the block’s chain, or canceled and considered invalid. Once a block is added to the chain, miners receive a reward for their efforts in cryptocurrency.
Each block is connected to and dependent on the blocks before it, forming links in the chain (hence the name “blockchain”).
The entire blockchain is stored on numerous computers around the world. Therefore, even if one computer fails or is hacked, the blockchain continues to function due to its decentralized architecture.
To access and utilize the blockchain, you must use keys. There are two keys: a public key and a private key.
A public key is like an address, so it can be shared with anyone. A private key is like a house key that you don’t share.
Security and accuracy
Blockchain is considered accurate and secure. Data blocks are linked with previous blocks after verification by multiple miners, so the information is stored on many computers, making it extremely difficult to tamper with the data.
Second, the information in the blockchain is constantly tracked and verified. All parties can view the information in the blockchain. This openness helps build trust because everything is transparent.
Finally, blockchain supports decentralization. Rather than a single central authority (such as a bank) controlling information, blockchain distributes control among many users. This makes it less likely that a malicious person will disrupt the entire system.
Impact of blockchain
When I researched blockchain technology, I found that it has some drawbacks. Perhaps that is why we think that it will take some time for the father to become an integral part of our daily life.
Abode stock
One of the key issues is high energy consumption. Imagine handling 1 billion transactions that need to be verified by multiple miners. This is billions of processes that computers need to manage at instantaneous speed.
A large number of very powerful computers are required to reliably complete a transaction, which means that large amounts of energy consumption has an impact on the environment.
Like AI, blockchain also requires large amounts of computing power, and such high levels of energy demand raise sustainability concerns.
To meet energy demands without further damage to the environment, companies are researching renewable energy and efficient hardware to support such innovative technologies.
Another challenge facing blockchain is global acceptance. In social studies, we learned that the concept of voting was born out of differences of opinion. What is advantageous to one group may not be advantageous to another group. Getting multiple countries to agree on something is not easy. Because blockchain is relatively new and the laws governing it have not yet been established, there is uncertainty about how blockchain will evolve.
Another problem with blockchain is false positives. Although blockchain has proven to be highly accurate in verification, errors and mistakes can occur. There is no proper way to correct mistakes that have escaped validation. Transactions are assumed to be accurate and free from errors. While it is possible that no errors occurred or were detected, the disadvantage could be that there is no way to correct errors after the block is attached to the chain. Think about typos in your essay. To be honest, I would be very anxious if I didn’t get the chance to correct the mistakes I made. It turns out that the use of blockchain is still very limited as many companies have the same concerns.
blockchain today
Despite the challenges, this is a promising technology that many companies are applying to improve our daily lives.
Cryptocurrencies (Bitcoin, Ethereum, etc.) and NFTs (non-fungible tokens, also known as digital assets) are the most common uses of blockchain technology.
Financial institutions are implementing blockchain for payment processing and fund management/remittance. JPMorgan Chase Onyx, Visa, HSBC, and Barclays all use blockchain technology.
Walmart is implementing blockchain for inventory management and supply chain management. Safety is ensured by tracing food back to its source until it is sold. Similarly, De Beers tracks diamonds from mine to store to ensure that size and quality are maintained.
Singapore Airlines is using blockchain to build its loyalty program, and several other airlines are also considering blockchain for reservation management.
Propy is a Silicon Valley company that is changing the way real estate transactions are done by using smart contracts and storing all documents on the blockchain.
The FDA is said to be working on using blockchain to protect patient information.
Companies that sell IoT devices (Internet of Things), such as smart home devices (doors, refrigerators, lights, etc.), are implementing blockchain technology to secure communications between these devices.
Where are you going with this?
As Bitcoin and other cryptocurrencies become household terms, I am confident that innovation will emerge to overcome current challenges. We hope to have a better experience with accurate and fast transactions in the near future. One day, you will be able to travel to another country without having to go through the trouble of exchanging dollars for another currency.
