My submission for homework task set by @gbenga which is about :
The Security Benefits of Applying Blockchain Withing any Industry, and the impact of cryptocurrency on the industry.
Before discussing security benefits of blockchain within any industry a brief introduction of blockchain is mandatory to help in better understanding of the topic.
What is blockchain ?
It is a public ledger to record cryptocoin transactions. As the name implies, it is a chain of blocks . A block is a record of accepted transactions maintained via cryptographic functions on powerful computers and GPUs known as nodes
Each block is a combination of hash of previous block extending upto the initial block from where transactions has initiated and root of current transaction with time and nonce. Each node of the blockchain after checking and validating the transaction, store a copy of it on ledger and than transmit the information to other nodes for validation and independent storage. In this way, there are multiple checks and balances of the transactions.
Advantages of Blockchain and cryptocurrency in industry.
As every blockchain transaction is verified before recording in the form of blocks on nodes and each block being a combination of hash of previous block, root of current block, and a timestamp, therefore tampering such blocks is almost impossible when compared to traditional methods of recording transactions. So it definitely adds to security .
However incidents of online hacking, phishing, spamming are no exception even with blockchain.
As blockchain is a public ledger to record cryptocoin transections, the recorded transactions are immutable and noneditable. The public address of transaction can be viewed by all. Therefore it makes blockchain more transparent.
Incorporating blockchain would make an efficient accounting system because every transaction is verified before recording and transaction are uneditable which eliminates chances of human error and tempering . So an inbuilt and comprehensive audit system would be possible.
P2P Global transaction
As for moeny transfer among large cap businesses is concerned, certain hurdles are unavoidable like time taken for transactions , bar on transferrable amount and geographical restrictions. Accepting blockchain would allow spontaneous transaction of sizeable amount globally. Therefore would increase ease of doing business.
With the boom of online shopping and order tracking the quality of service provided has improved. If blockchain is incorporated in industries, quality of service delivery will increase as tracing of transactions to the genesis block is possible. Any interruption at any place is traceable and can be rectified on time.
Elemination of dependency
With widespread acceptance of cryptocurrency in industries, it being a decentralized system completely eliminates dependence on banks as every one is custodiam of his/her assets. Cryptos can be transferred from anyone to anyone (P2P) and anywhere. Customers need not wait for hours at banks
Making international transactions on traditional financial platforms charge high fee when compared to DeFi system.
Excellant Record keeping
Entries made on blockchain after verification cannot be deleted and are always available at single click unlike traditional record keeping system where tons of papers have to be turned to check details. Even if records are maintained on computers , tracking is easy but records cannot be maintained for long time and than limitations due to virus, hardware malfunction are inevitable.
So for we have seen only bright side of cryptocoin use in industry. Now let's look at darker side too. With the adoption of cryptocoin by Industries, following issues may arise:
Volatile Nature chaos
Cryptocoins have no intrinsic value and price is almost entirely speculative. It can go either ways , from high to low or low to high and that too within short span of time and than there is no body to be held accountable for. The volatility is because there is no federal reserve to stablise the purchasing power as there is no easy way to increase or decrease the supply of cryptocoins ( say Bitcoin } which could have served means of mitigating deflation and inflation.
Use in illegal transactions.
Noterity of cryptocoins (say Bitcoin) for illegal transactions is associated with anonymity. There is no denial of fact that cryptocoins have potential of being misused for illegal transections like drug trade, money laundering , arms and ammunition sale etc Does it mean that illegal activities are occuring only under ambit of cryptos only? The answer is, NO. These activities have been going with fiat currency too before release of cryptocoins. All depends upon users intent.
Taxing of cryptocoins
As there are no taxing mechanism for cryptooins yet. Those who want to evade tax take advantage of it and use it as investing tool after thorough risk benefit analysis. And as long as governments don't find effective ways to regulate this aspect , legal status is going to remain suspended.
With technological boom, new technologies are brought to play day in and day out. Adoption of blockchain by industries would address most of existing issues and would definitely be a step forward as for technology is concerned but at the same time some adverse outcome are inherent too.