2017 is said to be the first year of virtual currency, and virtual currency, which was not well known until then, became widely known to the general public through the media. Recently, we often hear words such as “virtual currency” and “blockchain” as a matter of course.
In particular, Bitcoin, the representative of virtual currency, has spread virtual currency to the world. In December 2017, it recorded a market capitalization of 2.4 million yen and became a big topic. There should be many people who learned about virtual currency from this soaring bitcoin.
In the first place, virtual currency is a digital currency that has the same value as legal currency such as the yen and dollar. Since it is a digital currency, unlike banknotes and coins, it does not exist in the real world and can be managed as data on the Internet.
And there is an indispensable technology to make this virtual currency work as a currency. Blockchain is said to be the underlying technology of virtual currency. Also known as distributed ledger technology. This time, we will introduce the advantages of blockchain.
Reasons why blockchain is attracting attention in various fields
First, let me explain what exactly blockchain is. Blockchain is called distributed ledger technology or distributed network. To put it simply, it is a ledger with various functions.
A ledger is a book that records the details of purchases and transactions. Think of blockchain as a virtual version of that. In other words, it is a database that records virtual currency transactions. So why are virtual ledgers getting so much attention from the public?
This is because blockchain has the potential to bring about innovation in a wide range of fields other than cryptocurrencies.
It is possible to create a financial system that makes it difficult for data to be destroyed
Blockchain data management achieves high reliability from its mechanism. Blockchain manages transaction data by connecting blocks that collect transactions in a chain. A transaction is a transaction, and a block is a unit that represents that data.
A block contains transaction data from before the block was generated. Furthermore, the transaction data is encrypted with a hash function and then stored in the next block. A hash function is a cryptographic method that outputs a value that is completely different from the input value.
In other words, the blockchain data management system is hard to fraudulent or tampered with. By using this mechanism, it is possible to create a financial system in which data is less likely to be destroyed by malicious entities.
Fast remittances, cheap remittance fees, etc.
A remittance service that utilizes blockchain makes it possible to send money faster and at a lower cost than conventional remittance services. The reason for this is the low cost of system construction and operation.
The conventional system was managed by a central organization, which took a long time to process through large-scale server management costs and multiple intermediaries. By taking advantage of the characteristics of blockchain, it is possible to reduce these costs.
Advantage 1 of Blockchain: Decentralization of Data
A typical database aggregates and manages data in a central organization. However, as blockchain is a distributed ledger technology, multiple computers share the same data, and each other monitors whether the data is correct.
Unlike the centralized type, transactions are rarely stopped
A system that collects and manages data in a central organization is called a centralized system. In this case, if a problem occurs due to regular maintenance, cyber attacks, or a temporary increase in load, the system and services will stop, and downtime will occur.
Blockchain, on the other hand, is decentralized, so even if one computer malfunctions, other computers continue processing. This means zero downtime.
There is no management company, so there is no fee or it is cheap
Centralized data management requires a large server such as a central server. There are costs involved in equipment investment and maintenance. However, a decentralized blockchain manages transaction data on the computers of an unspecified number of users. In other words, it is possible to reduce the cost of all fees such as remittance fees.
By adopting blockchain technology, services can be provided free of charge or at a low cost.
Remittance overseas is faster and the problem of fees is improved
In general, sending money overseas from a Japanese bank incurs a fee of several thousand yen. The reason why it is so expensive is that although the remittance procedure itself is simple, there is a huge system running behind the scenes. However, a remittance service that utilizes blockchain can reduce the cost of system construction and operation.
Therefore, as long as you have an internet connection, you can send money quickly and cheaply anywhere in the world.
Advantage 2 of Blockchain: Transparency in Transactions
Why is high transparency, the greatest merit of blockchain, realized?
Transparency as all users can check transactions
Blockchain manages transaction data while sharing it with multiple computers through a network. Any computer connected to the network can obtain the information. This management system that shares information among all users achieves high transparency.
Even if you try to make a fraudulent transaction, you can find it immediately
Multiple users judge whether the same transaction data is legitimate and record it on the blockchain. If half of the users do not judge the information to be correct, it will not be written to the blockchain. Even if a malicious person does something wrong, such as rewriting transaction data, it is structured so that it can be detected immediately.
All transactions are visible to all users
Traditional centralized systems have specific administrators managing data. However, there is no administrator in the blockchain system. All transactions can be checked by all users. It can be said that the system that monitors each other and maintains data integrity is highly secure.
Advantage 3 of Blockchain: You can streamline your business
The main reason blockchain is attracting attention is that innovation can be expected in a wide range of fields, not just cryptocurrencies.
Use in medical settings makes it easier to receive treatment
By applying blockchain technology to data management in the medical industry, countries, hospitals, and medical personnel can safely share correct information. If blockchain technology makes it possible to pay for medical expenses smoothly and submit medical records, it will be possible to receive medical treatment at a lower cost and faster than now.
Improving the capacity of the health system as a whole will help fill the gaps in health care created by the financial problems of countries of birth and families.
Reducing the cost of paying company salaries
Virtual currencies using blockchain technology that does not require the intermediary of a central institution can be cheaper than traditional bank remittance fees. It eliminates the need for intermediaries such as banks, allowing faster, cheaper, and more accurate transfers. You can reduce your company’s payroll costs.
Leveraging blockchain to improve corporate services
By using blockchain technology, unnecessary costs and human errors can be greatly reduced. This is expected to improve services for companies in all fields. For example, we often hear that when you purchase a product from an online shop that you cannot see and touch, it is completely different from what you imagined.
Therefore, by using blockchain technology to make the process from product manufacturing to sales transparent, we can eliminate the anxiety of our customers. Proving trust and security means responding to customer needs. This also applies to food companies.
In this way, blockchain technology has a high potential to bring innovation to companies in a wide range of fields.
Summary of Blockchain Benefits
Blockchain, which has attracted worldwide attention at the same time that virtual currency has become widely known, creates many unprecedented benefits. There is no doubt that it is a revolutionary technology that affects all areas. However, the reality is that there are still challenges.
With constant research and development, it won’t be long before blockchain becomes a part of our everyday lives. If this technology is used correctly, our lives should become richer. Keep an eye on blockchain technology, which continues to attract worldwide attention.