What is Blockchain and Why Cryptocurrencies Matter
In the past year or so people’s attention has suddenly been turned to cryptocurrencies. All the articles about people getting rich quickly started flooding the internet.
Everyone started saying how they “almost bought a bitcoin in 2011” and how they wonder how rich they would have been if they spent a couple of bucks years back. And then everyone jumped on the Cryptocurrency bandwagon and immediately were disappointed when they did not wake up a billionaire. However, cryptocurrencies were meant to be neither a “get rich quick” plan nor a “get rich quick” scam. Due to the benefits of the blockchain, they have the potential to become widely used currencies and not just a lottery. A lot of people and companies are already jumping on board and accepting cryptocurrencies. But what is the praise they are getting for? What are the advantages of cryptocurrencies?
So, what’s this blockchain thing about?
First of all, let’s examine the mechanism behind these currencies – blockchain. It is essentially a chain of blocks, the blocks being a continuously growing list of records. Each block has a unique fingerprint-like cryptographic hash or code; the block also contains the hash of the previous block in the chain. Any alteration in a block changes its hash which makes all the subsequent blocks invalid as the succeeding block does not recognize the new hash. Transactions with this blockchain mechanism do not require any intermediary such as a bank. And the users do not need to trust each other either; they just need to trust the system which is near impossible to abuse.
So now we see that blockchains do not require a middle-man between two trading parties, and this means several things. First, if you are making a transaction through a bank or such, you are probably going to have to wait a bit while the transaction is pending. With cryptocurrencies, there might sometimes be some waiting involved as well. Nevertheless, it usually lasts much less, several hours at worst. But in most cases, the waiting period is limited to 10-15 minutes if any at all. Either way, blockchain will never make you wait the whole weekend, unlike many banks.
Transaction fees are much cheaper with cryptocurrencies. Traditional transaction fees can cost businesses and service providers anywhere between 0.5% to 5.0% of the transaction amount plus $0.20 to $0.30 per transaction. But crypto transaction fees can go as low as 0.1%.
Benefits of overseas transaction
Using crypto is especially beneficial in cases of overseas transactions or when traveling. Fees can be even higher when dealing with exchange rates but even without the fees, it is still quite a hustle. With cryptocurrencies it does not make a difference what country you are in, the fees will stay the same. And regarding international transactions, the payments are fast, secure and confidential. For international businesses, purchasing and selling entirely in cryptocurrency does not require managing multiple currency accounts.
Overall, using cryptocurrencies can be incredibly useful and beneficial. But the mechanism behind it called blockchain is not all about cryptocurrencies. Blockchain can be of great use in developing various solutions, and that’s exactly what Digitec Intl offers.