Blockchain Technology

A new entry for a new era!

Introduction

Blockchain was first introduced in the 1990s, but it became very popular after 2009 when an anonymous person named “Satoshi Nakamoto” introduced Bitcoin.

Blockchain is the list of records called blocks that are linked together via cryptography. It can simply be understood as a ledger, where each block contains relevant data like financial transactions, medical records, etc. A block contains a unique hash, which is the digital signature of the data in the block and which helps to uniquely identify a block from other blocks. The initial/first block is known as the genesis block. Each block is linked with other blocks and the other block contains the hash of the previous block.

Why does Blockchain matter?

As mentioned earlier, a block contains a unique hash and also a hash of the previous block. So, if anyone tries to tamper with the data or information stored in the block, the hash of the block gets changed. Since, the next block is storing the hash of the previous block and since the previous block’s hash gets changed, the next block becomes invalid as it no longer stores the previous block’s hash.

Also, the blockchain is a distributed database, i.e., there is no central system or server and the data is available to computers all around the world. Users from all over the network can get a full copy of the blockchain i.e. all the data like transactional data, records, etc., and they can verify and keep track of the data, which helps maintain transparency.

Some Applications of Blockchain:

Blockchain technology has become a very major factor in the development of whole new technology and ideas like Cryptocurrency, Web3, NFT, and Decentralized Voting applications (DApps).

Here in this article, we will be discussing two of the trending applications of Blockchain i.e. Cryptocurrency and NFT.

Cryptocurrency

In the present time, where every little object, whether it be a certain tool or it is an asset, everything has taken its grand entry on the digital platform, and this has made everything happen with a click. It was more than obvious that the centralized currency system was heading towards its extinction. . If we just pause and think about it, it’s something extraordinary, it’s like magic!

Let’s understand what exactly is cryptocurrency.

A cryptocurrency is a digital or virtual currency, where the blockchain is used to record and secure every transaction. Since it works on blockchain technology, it does not have central issuing or regulating authorities and is decentralized, i.e. the payment is sent directly from one party to another party without going through financial institutions. If incase, we make payments or transactions with cash or digital payment service provided by banks or e-wallets the transactions go from sender to receiver through the middleman like banks and other financial institutions. The services provided by financial institutions no doubt are very useful and convenient, but there are some ways where things could get wrong and cause inconvenience.

Some of the few scenarios would be:

1. Technical issues like the system being down
2. Bank account being hacked
3. The transfer limit being exceeded
4. The capital loss due to the middleman(transaction cost)

These all situations can be prevented by the use of cryptocurrency. Since the cryptocurrency contains no middleman, the transactions are simply from sender to receiver where the system checks the necessary criteria like required balance, user authentication, etc. and the transaction takes place in a matter of minutes.

The top 10 Cryptocurrencies in March 2022 as listed by Forbes are:

• Bitcoin
• Ethereum
• Tether
• Binance Coin
• US Dollar Coin
• XRP
• Terra
• Cardano
• Solana
• Avalanche

NFT

NFT stands for Non-Fungible Token. They are digital representations of assets on blockchain with unique identification codes. Since the identification codes are unique i.e. the token is unique, the asset becomes non-replaceable. The assets may be anything like music, digital painting, video game skins, tweets, etc.

Let us understand the term ‘non-Fungible’ with a simple example. Suppose, you and your friend have a bitcoin, so you can digitally exchange your bitcoin with your friend’s bitcoin, and both have the same value, suppose you have a painting, and if you exchange your painting with the painting possessed by your friend you will get a whole new thing as the previous painting was unique in itself i.e. it does not have the same value. NFT allows the buyer to own the original item, and it contains built-in authentication, which serves as proof of ownership. The unique identity and ownership are stored in a blockchain, typically on the Ethereum blockchain.

Nowadays, selling digital artwork using this technology is a great hype. Popular Bollywood actor ‘Amitabh Bachchan’ made 7 crores selling his NFT collection. Not only popular artists but, also has made ordinary people millionaires. A very great incident took place where Sultan Gustaf Al Ghozali, an Indonesian student, took a photo of himself every day for five years and sold his selfies as NFTs and his collection reached a trading volume of more than $1 million. Buying selfies for this huge money may seem very absurd but many people have the habit of collecting this kind of thing which opens the door to new opportunities for many creative people.

Not only digital arts but tweets as well by famous personalities have been sold as NFT which was bought at a very high price. Twitter CEO Jack Dorsey sold his first tweet as an NFT for the price of $2,915,835.47. NFTs are typically sold and bought with cryptocurrency. NFT now has become a great medium to sell your creations online in the digital world.

Potential & feasibility of Blockchain Technology in Developing Countries like Nepal

Blockchain technology has great potential in developing countries like Nepal. Yet there still exist some challenges on the way forward. The transaction records and other important data when kept by a single organization, it is very easy to manipulate, and high possibility of getting tampered with data by authority figures or other important people for their benefit. Now, if Blockchain technology is used to store such data, it cannot be modified and tampered with easily for some personal benefit. So, this, in a way, helps to solve the huge problem of corruption. The Nepal Government also can use it to keep and manage records of its citizens. Blockchain technology can also be implemented for fair and transparent elections to ensure that the votes have gone to the person whom we have voted for as the records will be stored in the blockchain and no one can modify the votes for their personal or political benefits. Financial transaction which requires middlemen like banks and other financial institutions can eliminate the middlemen using blockchain technology as people now no longer require the help of these institutions to send or receive money. Blockchain technology can also be very helpful in tracing the origin of the product. For example, if you buy a vegetable from a store; how do you know where the vegetable has come from to ensure its quality? So, the use of blockchain technology will be of great help in such cases as the origin of the product can easily be traced, and the citizens can buy quality goods and food items for a better lifestyle.

Conclusion:

So, Blockchain technology is considered to be a technology that is growing from good to great, as it has successfully been implemented in developing whole new technology like Cryptocurrency, NFT, and concepts like Web3. Blockchain has led the foundation for building a decentralized and transparent system for the people, industries, various institutions, and the country as a whole for economic and financial development. Information and data now with the help of Blockchain can easily be traced and cannot be tampered which proves that Blockchain in the future is not only going to be limited to the present application of the technology, technologies, and services in the future for sure will use Blockchain Technology and this technology experience immense growth in coming days.

Writing Credit

Sushankhya Chapagain