A blockchain facilitates secure online transactions. A blockchain is a decentralized and distributed digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. This allows the participants to verify and audit transactions inexpensively.
The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.
A distributed database
Information held on a blockchain exists as a shared – and continually reconciled – database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.
Transparent and incorruptible
The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Two important properties result from this:
- Transparency data is embedded within the network as a whole, by definition it is public.
- It cannot be corrupted altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network.
The idea of decentralization
“The blockchain is a decentralized technology”
Anything that happens on it is a function of the network as a whole. By creating a new way to verify transactions aspects of traditional commerce could become unnecessary. Stock market trades become almost simultaneous on the blockchain, for instance or it could make types of record keeping, like a land registry, fully public. And decentralization is already a reality.
A global network of computers uses blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
The blockchain gives the ability to create value and authenticates digital information that can be very helpful in Nepal.
- Smart contract
Distributed ledgers enable the coding of simple contracts that will execute when specified conditions are met.
- Sharing economy
By enabling peer-to-peer payments, the blockchain opens the door to direct interaction between parties a truly decentralized sharing economy results.
- Crowd funding
Blockchain take this interest to the next level, potentially creating crowd-sourced venture capital funds.
By making the results fully transparent and publically accessible, distributed database technology could bring full transparency to elections or any other kind of poll taking.
- Supply chain auditing
Distributed ledgers provide an easy way to certify that the backstories of the things we buy are genuine. Transparency comes with blockchain based time stamping of a date and location on ethical diamonds, for instance that corresponds to a product number.
- File storage
Decentralizing file storage on the internet brings clear benefits. Distributing data throughout network protects files from getting hacked or lost.
- Prediction markets
Predictions markets that pay out according to event outcomes are already active. Blockchain are a “wisdom of the crowd” technology that will no doubt find other application in the years to come.
- Protection of intellectual property
Smart contracts can protect copyright and automate the sale of creative works online, eliminating the risks of file copying and redistribution.
- Internet of Things (IoT)
Smart contracts make the automation of remote systems management possible. A combination of software, sensors, and the network facilitates an exchange of data between objects and mechanisms.
Blockchain technology enables the buying and selling of the renewable energy generated by neighbourhoodmicrogrids.
- Identity management
Distributed ledgers offer enhanced methods for providing who you are, along with the possibility to digitize personal documents. Having a secure identity will also be important for online interactions for instance, in the sharing economy.
- AML and KYC
Anti-money laundering (AML) and know your customer (KYC) practices have a strong potential for being adapted to the blockchain. Currently, financial institutions must perform a labour intensive multi-step process for each new customer. KYC costs could be reduced through cross-institution client verification, and at the same time increase monitoring and analysis effectiveness.
- Data management
In the future, users will have the ability to manage and sell the data their online activity generates. Because it can be easily distributed in small fractional amounts, Bitcoins, Ethereum or something like it.
- Land title registration
As Publicily-accessible ledgers, blockchains can make all kinds of record-keeping more efficient. Property titles are a case in point. They tend to be susceptible to fraud, as well as costly and labour intensive to administer.
- Stock trading
When executed peer-to-peer, trade confirmations become almost instantaneous. This means intermediaries such as the clearing house, auditors and custodians get removed from the process.
Blockchain in context of Nepal
Blockchain is the technology that enables the existence of cryptocurrency. A digital, decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network. The major innovation is that the technology allows market participants to transfer assets across the Internet without the need for a centralized third party. Here in the Nepal Rastra Bank (NRB) the central and regulatory bank of Nepal steps in and announced on August 13th, 2017 that the operation of bitcoins or any other cryptocurrency is illegal in Nepal. The notice followed the illegal activities and networking business done in cash and in person with gravity coins. Many companies like Bitsewa Bitcoin Exchange operating in Nepal have been shut down. A notice from Nepal Police regarding illegal use of bitcoins that focus on ground stating bitcoins and anti-money laundry perspective (Nepal Rastra Bank Act 2058).