Blockchain Explanation
There’s been a lot of buzz about the blockchain in the last few years. People are discovering cryptocurrency. Even people who use the blockchain may not be absolutely sure what it is and how it works. Although it isn’t necessary to get too technical, it’s good to know a few basic facts about the blockchain before taking the plunge with crypto assets.
The blockchain is well-named because it works like a chain that people keep adding links to. Every time someone makes a transaction, it adds a new block to the chain. These blocks can’t be erased or altered. One reason people like the blockchain is they believe it provides complete transparency because all transactions are recorded permanently.
However, one aspect that makes the blockchain less transparent is that each transaction and bitcoin wallet is identified by numbers rather than names and locations. When you send money to someone through a bank transfer or credit card, you’ll need to know the recipient’s name, bank or card company, and sometimes, a billing address.
However, crypto transactions don’t require any of this information – just the codes that will send your money to an anonymous bitcoin wallet.
Advantages of the Blockchain
Crypto fans talk about the freedom and convenience of the blockchain. They don’t have to deal with lengthy rules or regulations, extra fees, or red tape. They make the case that the blockchain is highly secure and transparent because all transitions are recorded and protected with encryption. Anonymity may make people less vulnerable to impersonation or identity theft.
Problems with the Blockchain
However, along with the advantages provided by blockchains, there are drawbacks. Some aspects of the blockchain that may seem advantageous in some contexts may seem like disadvantages in others.
For instance, even though the fact that all transactions are permanent can seem to simplify things, it means that no transactions can be cancelled or reversed. There are no chargebacks, as with credit cards. If there is a dispute, you must persuade the merchant or broker for a refund, something they aren’t often ready to give.
Also, anonymity may seem to provide an extra layer of security, but it also gives cover to crypto frauds. The fastest growing type of online fraud are cryptocurrency schemes. Victims don’t really know who they are dealing with and individuals don’t have the resources to track down their funds in an anonymous bitcoin wallet.
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