Will Blockchain Actually Make Online Payments Safer?
By Space Coast Daily // May 10, 2019
Though Bitcoin and other cryptocurrencies are still down and are far from its 2017 performance, it is undeniable how blockchain has changed the way we live our lives. In fact, believers are speculating the possibility of adoption, especially in the coming years.
Though adoption is still a long way to go because of the lack of regulatory clarity within the niche, it’s still intriguing to ask about the potential that blockchain offers to the table. Can it be possible that the use of blockchain technology actually makes online payments safer?
One of the things that made cryptocurrencies popular is because of the security offered by blockchain. There are already a good number of people looking for an alternative to online transactions mainly because there are chances for fraud with online transactions.
For instance, even Paypal is vulnerable to this. You get to have cases of “double spend” wherein two payments are being made on the same account at the same time. And also, banks can actually get robbed. It has a central storage where the assets are being kept.
What Makes Blockchain Secure?
To understand how blockchain keeps transactions secure, it is imperative to understand the concept used in this technology. Blockchain is basically a chain of digital “blocks”. Each block contains transactions and is tied to other blocks. What makes blockchain difficult to tamper with is the fact that each block needs to be approved before it is included.
Miners, using their computers, confirm whether a transaction is valid or not. Because of this concept, it means that it is hard for a hacker to tamper with any transactions on the blockchain.
Now, one characteristic that makes blockchain special is the fact that it is decentralized in nature. It means that someone who wants to steal assets from the blockchain will need to tamper with the entire network at once. Since this will need an incredible amount of computing power, it’s basically impossible to do so.
Transparency and a Level of Anonymity
One question that a lot of people have in mind is privacy. If everything that happens in a blockchain is opened to viewing by anyone on the network, does that mean you can’t hide anything?
While it’s true that all transactions carried out on the network is completely transparent, each individual’s real identity is still secure, meaning there is still some layer of anonymity on the part of a user.
Benefits from Blockchain?
There are a lot of industries today that could potentially benefit from the use of blockchain. In particular, many of these industries can take advantage of the security offered by the technology.
- Reduce the cost of cross-border transactions
Ripple’s XRP has been leading the way towards promoting a fast and secure alternative to money transfer. With the help of xRapid and other Ripple-related products, it becomes possible to send XRP to other parts of the world. It can lessen the cost as well as the time needed to perform cross-border transactions.
Ripple has been able to partner with different banks as well as companies such as Western Union to test the possibilities brought by XRP. Ripple has also targeted countries that have depended on remittances. Here, they plan to resolve the high transaction fees and the large population that are bankless.
- Improve casinos
Another industry that can benefit from blockchain technology is the gambling industry. Both online and land-based casinos have things to gain from implementing blockchain technology.
Bitcoin casino sites not only offer players the chance to use cryptocurrency as a payment method, benefiting from faster transactions, but they also greatly benefit from the transparency that blockchain technology offers. With this, online casinos will be able to combat one of the biggest issues that many players have when it comes to playing with real money at online casinos – trust.
- Improve Payment Options in the Retail industry
There is a growing number of companies today that are starting to accept different cryptocurrencies. This signifies the changing of times. In fact, Japanese e-commerce giant Rakuten has already been involved in its cryptocurrency exchange. This move is seen by many as Rakuten’s openness to cryptocurrencies in its role in retail.
- Lessen the Line on Exchanges
Ever imagined yourself in Tokyo 2020 Olympics? Are you supposed to exchange your cash to Japanese Yen prior to your trip? These types of events have been known to form long lines in currency exchanges. Now, with the help of cryptocurrencies, there is a chance that the lines will be far shorter. In fact, Japan is already thinking of having a blockchain experiment in the coming 2020 Olympics. There were reports that Mitsubishi UFJ Financial Group along with Akamai, a startup from the US, is looking to use blockchain.
But of course, this could pose some problems. For instance, to this point, cryptocurrencies are still not mainstream. Therefore, how much impact it’ll have on exchange queue lines is yet to be seen.
In addition to this, Japan could actually miss the opportunity to generate hundreds of millions of dollars that could help the Japanese economy.
- Safe Haven
Next, because of the security offered by cryptocurrencies (especially if stored properly), there could be a chance that it can be used as an alternative to gold. Gold is not only bulky, but it is also costly to secure. Could you imagine how central banks keep their gold? In addition to this, there is always a risk that you might have bought fake gold.
Is Blockchain 100% Safe?
Does blockchain have the ability to make online payments safer at this point? Given the nature of blockchain, this is indeed a definite possibility.
However, it is not completely risk-free. For instance, you have the likes of a 51% attack. This pertains to the activity of a group of miners that are going to control more than 50% of the network’s mining hashrate.
This means that they have the control to prevent new transactions from getting confirmed. This can halt payments and could even reverse the transactions. In short, a double spend scenario can also be a possibility in cryptocurrencies.
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