Last year was a true coming-out party for cryptocurrencies, with the aggregate market cap of all virtual currencies soaring by more than 3,300% — almost $600 billion on a nominal basis. At the heart of this surge in value for digital currencies is blockchain technology.
For those of you unfamiliar, blockchain is the digital, distributed, and decentralized ledger underpinning most cryptocurrencies that’s responsible for recording all transactions without the need for a financial intermediary, which is almost always a bank. Its rise to fame is a result of perceived inefficiencies with the current banking system, such as long processing times and exorbitant transactions fees that developers aimed to fix.
Today, blockchain offers three primary solutions to the limitations of the current banking system. First, blockchain is decentralized, meaning transaction data isn’t stored in a central server, but is instead spread across servers and hard drives across the globe.
Creating a decentralized network ensures that no single entity, including businesses or hackers, can gain control over a cryptocurrency or blockchain network, thus making it more secure than traditional banking networks. Secondly, blockchain removes banks from the equation.
With transactions involving just a sender and receiver of funds, there are fewer mouths to feed when it comes to transaction fees. In other words, lower transactions fees could be a boon for consumers and/or businesses. Read more from fool.com…
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