Blockchain technology is basically encoded data that is sent between parties known as peer-to-peer. This data is uniquely signed and/or identified making transactions faster and more secure. The data that is exchanged is called a block. These blocks are connected which in turn create an immutable chain and when chained together, these blocks of data secure information from being tampered or altered.
Sure it sounds complicated, but it is much simpler than described.
How Blockchain Technology Works
Let’s say you are trying to sell something online. You write a description, put a picture up, and set the price. Your customer sees the product, purchases it, and then you have to wait for the funds to clear their account before you can send off their items. Waiting for the funds to clear can take anywhere from a few hours to days which is why a lot of online stores ask for your patience before sending your products. They want to make sure your account has the funds to cover the goods.
But, with blockchain technology everything is done in a matter of minutes. You as the merchant put up the listing. Within this listing is all the information needed. The customer can see what they are getting, the price, and you the owner selling the merchandise. This is considered the first block.
Then your customer comes and wants to purchase your merchandise. The customer then plugs in their information letting you, the shop keeper know where to send the items, and how much they are paying you. This is the second block that is created by the customer who has agreed to pay for said product. When your customer places their order that block of information is attached to your block of information that you created for the item. That way there is no question about what your customer is buying. The third block of information is the merchant agreeing to send the customer the product. All this information is secured through the chain that was created in order to sell, buy, and obtain the product. And it all happened in a matter of minutes from the time you set up your item to the time you get the funds. There is no waiting period. The funds are transferred immediately.
Now, you may be wondering why this is so important. The fact of the matter is, there are over 30 different third parties that are involved with transactions each time you swipe your credit or debit card. Ever notice when you make a purchase your bank account says “pending” transaction? That is because all these third parties have to ensure that you have the funds in your account to cover the purchase you just made.
Blockchain technology cuts out these third parties and speeds up the transaction. There is hardly any wait time between when you purchase a product using blockchain technology and seeing it deducted from your account.
Tracking and Record Keeping
Today we have banks that hold all the information about your account. They know how much funds you have in your account, your name, address, and phone number. But banks are flawed and hackers are able to access your data as “identity theft” and steal everything you have in your bank.
Take a moment to look at your bank statement. Does it tell you the exact details of what you purchased or does it merely show the store were you spent your money? Chances are all you see is a brief name of a store followed by a string of numbers and the amount you spent.With blockchain technology, your funds are immutable and traceable. Click To Tweet
Anyone can look at a blockchain and know precisely what the funds were used for, where they went, and how much was dispersed. Blockchain technology helps you to budget your money better. So instead of looking at your bank statement and seeing that you went to your local grocery store, you will see precisely what you paid for down to the last candy bar.
The Future of Blockchain Technology
There are still a few people cautious about transferring over to blockchain technology. But don’t be surprised if in the near future everything from banking systems to healthcare to even your driving record can be found on a blockchain.