Bitcoin and blockchain: The disruptive technology

Bitcoin’s first documented use was in 2010; however, it did not enter mainstream use until 2014. Nevertheless, To function as a payment system using bitqs.online platform, bitcoin also uses public-key cryptography and peer-to-peer networking, which operates without a central authority.

Bitcoin as a form of payment is designed on a cryptographic protocol where every transaction is digitally signed and verified by the parties involved before being stored electronically on the blockchain, a distributed database.

The blockchain prevents double-spending, ensuring that each unit of bitcoin spent has been irrevocably spent only once. The process works through compiling pending transactions into blocks: groups of transactions that are processed together. Blocks are linked to each other within a chain of transactions that follow each other in a linear, chronological order.

Each member in the Bitcoin network builds on and processes the previously solved blockchain, using its unique copy of the ledger. This process allows Bitcoins to be transferred from one person to another without going through a bank or clearing house. In addition, the Bitcoin network records and validates every transaction in history.

The blockchain database is supposedly protected from corruption because each unit of data is linked to a unique digital ID — generated when new blocks are added to the chain and verified by other users’ computers at regular intervals. But, first, let’s discuss how blockchain and bitcoin have become disruptive technologies.

Transformation of blockchain into a disruptive technology:

Blockchain technology fosters trust:

Many blockchain and bitcoin startups use technology to support payments, remittances, supply chain management and other financial transactions. In 2022, the number of cryptocurrencies will increase from 2500 to 10000. The difference between blockchain and bitcoin is that the former is a distributed ledger technology with strict rules for embedding transaction rights and permissions.

Disruption due to decentralization:

Blockchain is a decentralized technology which means all network members have access to the data records. In addition, blockchain technology ensures people’s trust to use the network for transactions. For example, it can have a use case for executing smart contracts, escrow services and other financial transactions.

Blockchain increases efficiency:

It is common practice to spend time on reconciliation after each transaction or payment between two parties. Blockchain helps eliminate this wasteful expenditure of resources by automating the process, thereby reducing costs and promoting growth. As a result, blockchain decreases costs and increases revenue:

It is possible to cut costs by eliminating the intermediary role, thereby reducing transaction fees. For example, reducing the time of payments for cross-border transactions impacts revenue. Similarly, eliminating third-party intermediaries and associated fees ensures greater transparency and reduces costs.

In many cases, several intermediaries in a transaction are paid for their services. Blockchain eliminates this middleman, and hence, no need for third-party intermediaries. It can result in higher profit margins for merchants by passing it on to consumers through lower prices.

How is bitcoin disrupting the fiat currencies?

Through the use of blockchain, bitcoin is making the traditional money transfer easier and faster. For example, it uses cryptography to secure its decentralized ledger, enabling users to make payments without a centralized authority or intermediary. With this technology, one can perform any digital task like making purchases online, transferring money or trading assets without depending on an existing financial institution.

Bitcoin’s massive returns correspondingly expose the fault in our current financial system that is ripe for change. The year 2017 showed that bitcoin’s price rose by over 1,500%, making many investors wealthy. But unfortunately, it also prompted significant banks to cancel or slash their investments in blockchain companies. 

There is a growing consensus among experts who believe that bitcoin will eventually disrupt traditional payment processors like JP Morgan Chase and settle transactions by direct peer-to-peer cash exchange without any third-party involvement.

Blockchain technology will help financial institutions make their systems faster and more efficient. For example, banks today spend a lot of time reconciling the ledgers, which frequently causes a delay in payment processing or clearing operations.

Blockchain is a secure way of storing financial data and transactions that guarantees privacy, transparency and authenticity for all consumers. It’s called a “distributed ledger”. Since blockchain records all transactions, it prevents double-spending, fraud or tampering. As a result, this technology can prevent identity theft and other types of criminal activities in the future.

That’s all about how blockchain disrupts the traditional monetary system thanks to bitcoin.