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If Blockchain Revolution Occurs, It Will Take Time and Testing

Though blockchain technology has the potential to create a universal currency and revolutionize the ways people do business, expect its progress to move at a much more measured pace.

Even though the technology brings about excitement for its place its eventual role in society, experts caution that the technology, which was built with a combination of encryption and transparency, should be viewed realistically. Engineers and experts in the field of applied science believe probable users, investors, and the public need to better understand the technology and its limitations before moving too far and too fast into blockchain.

Blockchain Is a Ledger

In a way, blockchain can be compared to an old-fashioned accounting, which was a an account used to keep track of all bookkeeping entries, like accounts receivable, investments, and accounts payable. A blockchain ledger keeps records of all activity electronically, but all of the data is held in multiple locations across the internet.

Any person participating in a specific blockchain can view the ledger, which is held on a computer called a node. For example, let’s say you buy a gift card for your favorite home improvement store using the online store, Gyft, using blockchain currency. When you make this type of purchase, those operating the nodes use an algorithm to develop a new block or entry into the ledger. Your new entry is encrypted using an private, numeric key. Also, additional encryption is used to link new entries to previously made blocks.

Why This System Is Important and Unique

Both the transparency and the levels of encryption make it almost impossible to fake. Since the algorithms occur over multiple nodes and the participants can witness what’s happening, anything that happens to the contrary would be immediately flagged as suspicious.

Progress in Blockchain

Since the early days of Bitcoin, the technology has evolved. Many industries, including those in app development and international finance, have become quite attracted to the technology due to its current ability to track decentralized transactions.

Many businesses, and rightfully so, love the idea of trading money or assets between two parties because it eliminates the need for a central intermediary to oversee the transaction. This type of system would reduce transaction costs and boost efficiency.

The Major Obstacle with Blockchain

Despite the many positives, there is a major problem that keeps blockchain from moving full-throttle into the mainstream. First, it can’t be scaled to volume. Look at it this way: blockchain can handle about seven transactions per second while Visa hands more than 60,000 during that same period of time. That’s because the nodes that update transactions requires a lengthy process compared to the way card networks work.

This challenge, however, has not curbed the payment industry’s interest in the technology. Since high volume scalability is an issue, others are looking at the technology as a way to handle high-ticket, low-volume transactions, such as business-to-business and cross-border payments.

This is an appealing concept since they wouldn’t have to operate within the regular banking system, and could operate within private networks. With private networks, they could move money between their customers’ accounts any time, any day of the week.

What’s Happening Now

Some businesses are piloting blockchain programs while other third parties, the Global Real-Time Authorizations and Funds Transfers Project (GRAFT), are trying to figure out how to move blockchain ledgers into the mainstream.

GRAFT wants to create a decentralized payment platform to facilitate commerce without central banks, payment card networks, or governments. Participants of the decentralized network can fulfill various functions, including creating business and revenue opportunities and updating blockchains as super nodes.

The decentralized network is open to participants fulfilling various functions, such as acting as super nodes to update the blockchain, and creating business and revenue opportunities for users. The project was started because consumers were frustrated with having their data stolen through processors, merchants, and the credit card network.

It also hopes to fill a need for those under served in the payment industry, as well as high-risk merchants, like gaming and adult entertainment businesses, that get turned down for traditional merchant accounts or pay exorbitant fees.

While GRAFT takes a major leap with its project, others will continue testing to find a way to prove scalability can be accomplished.

The Final Say

With all things being equal, it is fair to say that blockchain technology isn’t going away. It may not be the revolution that early devotees expected it be, but only time and testing will show what it may be in the future.