Hardly a handful of coding engineers understood the concept of Blockchain when Satoshi Nakamoto, the founder of Bitcoin, published his “White Paper” on Cryptography on 31st October 2008. It was beyond the ability of common populace to comprehend what Nakamoto was talking about, let alone understanding the technicalities that underpin the Blockchain Technology.
So, What Is Blockchain In Layman Terms ?
Blockchain is a system where transactions or information is recorded in such a way that it is nearly impossible to tamper the information or record of transaction. In traditional computation, the recording of information happened at one place and one server. It is easier for the admin to manipulate the information as and when he/he wants, for example.
The game changing Bloch Chain introduces the concept of Decentralization. A copy of the transaction is sent throughout the network and it is mandatory that all nodes of the network must approve it ,for the transaction to become success. Technically put, it is a decentralized digital ledger where transactions are acknowledged and approved at multiple special points on a computer network.
The Relationship Between Crypto and Blockchain
Many a times people use words Blockchain and Crypto interchangeably. Though Crypto and Blockchain have something in common, the difference is significant and is more than just subtle. To put it simple, Blockchain is a well grounded tree with thousands of leaves on it representing multitude of use cases, of which crypto currency is just one.
From Agriculture to Banking Systems the Blockchain has near universal applicability. Preventing Money Laundering and Tax Evasion will become easier for Governments betting on Blockchain. For corporations the technology brings in first class Safety and for banks it can act as bulwark against financial frauds and hackers.
The Concept of Central Bank Digital Currency
Given the advantages of this cutting edge technology, many progressive Governments around the world are experimenting with “Central Bank Digital Currencies”,(CBDC), which is nothing but a Government promoted Crypto Currency! But there will be safeguards against any speculated trade. In fact, CBDC is the digital version official Fiat/Currency/Hard Cash issued by a central bank which can reduce the efforts which goes into printing and distributing Hard Cash.
This particular use case of Blockchain also helps the Government in tracking the trails of Black Money thus helping it to fight corruption and improve Governance. Given the benefits of blockchain technology and the possibilities associated, the Finance Minister of India in recent budget statement proposed a 30% tax on crypto currencies instead of a blanket ban.
The Darker Side of Blockchain
The complete anonymity that the trending crypto space offers has made it easier to launder money. It is easier for anyone residing in India to bypass RBI’s guidelines on how much money we can convert and send to foreign jurisdictions.
Just open a trading account on a crypto platform such as Binance and pour in as much money as you want, buy a crypto such as Bitcoin or ETH. Billions can be transferred in seconds and requires just two to three clicks. This challenges the monetary authority of a Central Bank such as RBI and risks the fiscal/budgetary responsibilities of the government, hence need solutions.
Given the emerging nature of Blockchain, policy makers need to provide the pace for the technology to grow and be ready at the same time to fix the issues as and when they arise, to make best use of Blockchain.
Featured image credit.
- Elon Musk Finds Loopholes, Parag Agarwal & Others Fired May Get $0 After Exit - November 1, 2022
- Twitter’s ex-CEO Parag Agarwal and Policy Chief Vijaya Gadde to get $120 million (around Rs. 1000 crores) as Compensation - October 31, 2022
- Moonlighting: ‘Conflict of Interest’ says IBM India to Its Employees - October 27, 2022