By 2024, the blockchain market is estimated to have $20 billion in revenue. This technology has been around for over a decade but recently gained massive adoption due to the opportunities it presents in the modern world.
So far, blockchain has been used to create digital currencies such as Bitcoin, Ethereum, Binance Coin, Solana, and, more recently, cryptographic tokens known as NFTs, but its potential applications extend far beyond that.
You’re not alone if you plan to explore this technology in 2023. Millions of people like you have the same aspirations, and the best part is that you’re all early. However, before diving into the depths of the blockchain, you must first understand what it’s all about and the benefits and risks that come with it.
What is blockchain
A blockchain is a distributed ledger system that stores data securely and transparently, allowing users to access and verify information easily without needing a central authority. Hence, it is called a decentralized system.
Due to its airtight security systems, this technology has been deployed in the healthcare, military, government, and money transfer sectors. It also has applications in smart contracts and logistics for global industries.
The origin of blockchain
Stuart Haber and W. Scott Stornetta developed the blockchain idea in 1991. They aimed to create a system to store time-stamped records in a way that could never be changed or tampered with.
However, the concept did not fully materialize until 2008, when Satoshi Nakamoto published a whitepaper that outlined the possibility of a decentralized electronic system, which subsequently gave rise to Bitcoin. Since then, the technology has been widely adopted by many industries.
Advantages of blockchain technology
A sensible question that comes to the mind of anyone attempting to partake in this technology is: What is in it for me? Find below the benefits the system offers.
Transparency
The system records every transaction and makes the details available to everyone with access. As a result, the blockchain’s data is equally available to everyone on the network and cannot be changed without the network’s consent. This feature contributes to the development of trust among users and offers a transparent and verifiable record of transactions.
Accessibility – you can easily buy BTC and other currencies
Access to this technology is widely available, as anyone from anywhere in the world can easily buy BTC at Moonpay. The process is simple, just sign up and start conducting transactions.
Basically, you do not need anyone’s permission to be part of the network; you only need a mobile device and an internet connection.
Transaction speed
Blockchain operations are recorded and verified rapidly and accurately since they are performed through a vast network of powerful computers. Moreover, these transactions proceed even more quickly as they do not require approval from any central authority. Many industries, especially finance, where processing transactions swiftly and securely is essential, find this technology appealing due to its high transaction speed.
Stability and permanence
Unlike traditional databases that run CRUD (create, read, update, and delete), information on this technology cannot be edited or deleted. This characteristic makes it nearly impossible for hackers to tamper with or falsify data stored in a blockchain, making it an attractive option for industries where security is paramount, such as finance, the military, or healthcare.
Decentralization
This means that transactions and operations on the network are not under the control of any regulatory body or authority. Even the government does not have the power to approve or disapprove its operations simply because it is not under its control.
Data verification
Data on this technology is highly tamper-proof; therefore, it is a trusted source for obtaining verified information about transactions and operations that may have occurred on it in the past. Think of it as an encyclopedia of rock-solid information.
For example, you can easily learn about transactions made by seasoned traders and use it to guide your trades.
Cost-effectiveness
Blockchain operations reduce costs just like AI does for eCommerce businesses. Since you can perform these operations without using financial services or seeking permission from third parties, individuals and enterprises get to spend less. Essentially, there is little to no need for intermediaries, banks, clearinghouses, or other financial institutions to operate on a blockchain, which means commissions and additional fees for financial services are significantly reduced.
Disadvantages of the technology
Despite these advantages, there are also some drawbacks to using this technology. Read on to find out what they are.
More carbon footprints
The decentralized and busy nature of the technology means that many computers, known as nodes, are constantly verifying and recording transactions on the network. In addition, each node must perform complex mathematical calculations to solve the cryptographic puzzles that keep the network running. This process typically leaves a ton of carbon footprint, which is bad for the environment.
Mining Ethereum, for example, consumes a significant amount of energy, and many are concerned that this is bad for the environment. However, some blockchain technologies, such as those that use proof-of-stake (PoS), are very energy efficient.
Complexity
Using this technology is not exactly a piece of cake. Many operations are highly complex and require extensive technical expertise, which is why it is yet to be widely adopted by many individuals and businesses worldwide. The silver lining, however, is that the complexity of blockchain enables a high level of security, making its data impossible to manipulate.
Fundamentally, the complexity of this technology has advantages and disadvantages, depending on the context.
Less accountability
Yes, this technology is transparent, and you can trace every transaction back to its source. However, they enable anonymity. In other words, anonymous individuals can launch operations and businesses, such as NFT projects, on a blockchain with less oversight, primarily because there is no authority regulating who does what on the network.
Unfortunately, this means that many unscrupulous individuals can launch fraudulent projects without revealing their identities, resulting in less accountability when things eventually go south. Furthermore, victims of fraud by anonymous individuals on a blockchain will most likely never be able to recover their funds as these unidentified elements cannot be traced.
That said, it is up to you to protect yourself and your business on this system. Only interact with verified networks with known and trusted founders.
Private keys
Private keys are alphanumeric elements that encrypt and decrypt data on blockchain. This system is an efficient security mechanism that prevents unauthorized people from gaining access to data.
However, despite its effectiveness, it can also cause problems, especially if you forget where you stored it or if it falls into the wrong hands. Unlike a bank or an online website, you cannot call a customer service representative to help you recover your private keys, which is why you need to keep them with utmost care.
Hacks and exploitations
The technology boasts a highly secure system immune to exploitation, but that’s not always true. Over the years, many blockchain technologies have experienced hacks and attacks that have cost them and their customers a lot of money.
For example, the Ronin network was hacked in March 2022 by hackers who made away with USDC and Ethereum worth $625 million. Of the stolen funds, they could only recover $5.8 million. Also, in October 2022, BSC Token Hub, a cross-chain bridge, lost about $570 million to hackers.
Many other blockchain companies, such as FTX, PolyNetwork, Wormhole, and NomadBridge, were also victims of attacks in 2022 alone, resulting in the loss of billions of dollars. In simple terms, despite the high level of security, attacks still occur, and investors lose money.
No data modification
The technology’s ability to resist data manipulation is impressive, but it can be harsh, especially when mistakes are made. There are no do-overs. You cannot afford to make mistakes when performing blockchain operations, as they cannot be reversed or corrected in most cases. This situation has cost individuals and businesses money and vital information, so you must be very careful.
How blockchain can help you achieve your goals in 2023
Just like AI revolutionizes online education, blockchain technology is revolutionizing finance, supply chain management, and voting systems in 2023 and beyond. Its ability to offer a secure, transparent and decentralized platform for recording and verifying transactions will be handy in reducing fraud, optimizing efficiency, and increasing accountability in the coming years.
In the future, you can use this technology to achieve a variety of goals, including:
- Improving the transparency and accountability of government and public institutions
- Enabling more secure and transparent voting systems
- Enhancing the security and efficiency of financial systems
- Providing better traceability and accountability in supply chain management
- Facilitating data sharing in a safe and decentralized manner
Blockchain: totally worth considering
Overall, the potential applications of this technology are vast, and its adoption is likely to grow in the coming years. Of course, precisely how it will be used to achieve your goals in 2023 and beyond is up to you, but its potential is undeniable.
So, if you are considering using blockchain technology in 2023, educate yourself and carefully weigh the pros and cons. With a deeper understanding of the technology and its dynamics, you can make informed decisions and manage risks.
