In general, Blockchain is defined as a digital ledger, where each transaction is recorded and secured in many databases that are widely distributed on the computer. In other words, Blockchain is a technology that no longer uses third parties in the process of exchanging data or transactions.
Even Blockchain technology can also reduce the level of corruption because transaction data will be instantly discovered with transaction history that is immediately visible in real time. With this decentralized transaction record, it is almost impossible for a database of hundreds or thousands of computers to be hacked or damaged easily.
Transaction records are also contained in blocks that are connected between one computer and another computer, between one network and another network. If one block is full, the next block will be connected to each other.
Tom Chitty from CNBC even analogizes Blockchain “like a giant Google Doc with a different key. We can see it, and add (transaction records), but can’t change the information there. Blockchain does that based on mathematical calculations called cryptography. That makes the recording can not be imitated and changed by anyone, “he explained again.
How Blockchain works
Bettina Warburg, a researcher at Transformative Technologies, explains the concept of the Blockchain is not much different from conventional buying and selling transactions. If a normal sale and purchase transaction is carried out by visiting a store, when using a Blockchain, there are still transactions but do not require a store.
Now for those who are accustomed to using eBay or Tokopedia, Warburg says that Blockchain is actually just a tool to facilitate transactions. When shopping at Tokopedia, users pay for their ordered items with money either through credit cards or bank transfers, this means that transactions are assisted by third parties, but if you use Blockchain, you don’t need eBay or any other third party.
A good blockchain project will certainly be supported by many miners (miners) who have helped to secure the blockchain network with the power of their computer networks. In essence, the miners will compete to complete a mathematical calculation.
Anyone who succeeds in solving the calculation correctly and accurately and creates new blocks for the blockchain will be rewarded.
Therefore these miners are very brave to invest heavily in buying powerful computer equipment and also paying expensive electricity costs for their activities, this has become a lucrative business and opportunity for investors.
Benefits and uses of the blockchain system for the sustainability of the financial business.
Can accelerate and facilitate cross-border payments
The high value of transfers and the time-consuming process makes using blockchain technology one alternative payment method that is considered easier, cheaper, and faster, besides the application of this blockchain technology can also certainly save significant transaction costs.
Facilitate trading and or selling of shares
Blockchain technology will certainly have an impact on stock trading in the future. Utilizing this blockchain technology enables a wider range of trading or sales accuracy with a shorter settlement process.
As a smart contract
Smart contract is one of the most promised and expected things in this blockchain technology. Smart contracts can carry out commercial transactions and carry out agreements automatically in enforcing the obligations of the parties in a contract without the need for intermediaries or third parties such as banks, non-bank financial institutions, and others.
Blockchain technology can improve security and online identity management
The workings of online identity management on the blockchain are quite easy, ie users can identify themselves and who to identify or for what purposes.
Transparency of each transaction
There are many advantages of this technology, one of which is transparency and transaction tracking. This certainly can help banks, insurance companies, other non-bank financial institutions to create more loyalty and reward programs that are compatible with 24/7 management performance.
Its users are given full power
Its users have direct control over all their information and transactions.
High quality data
Blockchain data is definitely complete, timely, consistent, accurate and widely available.
Stronger endurance and long life
With a decentralized network (not centralized), the blockchain system has no central point of failure and is better able to withstand all dangerous attacks from hackers, that’s why the durability of this financial system is very high.
Users can fully trust that the transaction they carry out will be carried out exactly as the protocol commands
Lower transaction costs
By eliminating the use of third party intermediaries and overhead costs for exchanging assets, the blockchain has great potential to minimize transaction costs.