Decentralized Ledger as a Consequence of Technical Innovations

Blockchain transaction

Decentralized Ledger as a Consequence of Technical Innovations

Humanity’s technological innovation has been a constant ever since we have discovered fire. However, it really started speeding up in the last several centuries. From the discoveries of things like the printing press and steam engine to modern technologies, the innovation has been moving faster and faster.

It continues to progress even to this day, and it is rather obvious, when you think about it. The last 20 years have brought more innovation than the previous century, while the previous century brought more of it than the past 1,000 years.

In other words, our technical innovation is speeding up, and will likely continue to do so for quite some time more. But, for the moment, you could say that it is at its current peak, with the hottest technology right now being decentralized ledger.

The solution lies in decentralization

Decentralized Ledger Technology (DLT) is a technology that was brought in response to centralization. Just think of it like this — if you have a bank account in which you have stored all of your money, that money is barely yours at this moment. Your bank has full control over the account in which the money lies, and therefore, it has full control over that money. It can freeze it or lock you out of your own account at any time.

Of course, due to the established trust — necessary in order for the bank to stay in business — that money is technically yours, with the bank acting as its guardian and manager. It will handle transactions for you and keep your account safe, but it wants a fee for providing such services. 

With no other way for you to send payments, apart from giving someone else an envelope full of cash, you pretty much have no alternative but to pay these fees and keep working with the bank.

This is where DLT enters the picture. 

What is Decentralized Ledger Technology?

Decentralized ledger technology acts as just that — a decentralized ledger upon which you can make payments directly to receivers, and have all the transactions stored on the ledger.

With it being decentralized, you have no institution, or centralized authority to answer to. You are in control of your money on a network maintained by the community of users. This community is the entity responsible for processing payments by contributing computing power to algorithms that do all the work, instead of relying on a centralized bank that would use a room full of servers to do it on its own.

The community also gets rewarded for doing so, and as a result, you get to cut the banks out of the picture entirely.

Decentralized ledger technology is also immutable, meaning that no one can change and modify data that is already stored on top of it. Any data is stored or changed only if more than half of the network agrees that the change is valid. 

That means that you would need to hack half of the network’s participants in order to control all of their devices, make the change, and then approve of it by using more than half the network, which is pretty much impossible on larger networks.

So, you have the security of funds, the removal of middlemen, immutability of stored information, and all of this is only scratching the surface of what DLT can offer. In fact, its full potential remains unknown to this day. But, researchers and entrepreneurs keep coming up with new ideas, and new methods of applying this technology are being discovered with every passing year.

DLT is the future

Over the past decade, the world has learned of this technology, which has since come to be known as the blockchain. By recognizing its potential, people started to use it more and more often, thus bringing new users to it. 

As it was recognized as a better, faster, and cheaper method of sending money than what the banks had to offer, traditional financial institutions realized that they are becoming unnecessary. If they do not bow to innovative methods, their existence will become obsolete.

And so, today, most major banks are looking into blockchain technology, trying to adopt it and start using it as part of their own systems.

They did not have much choice in the matter. But, then again, the banks were the ones who were indirectly responsible for the creation of this kind of technology. Due to some of the banks’ abuse of power and control over the people’s money, as well as corporate greed, banks were conducting credit schemes which backfired and led to a financial crisis back in 2008. 

Naturally, the people who trusted them with their money were not pleased, and eventually, an alternative to centralized systems was invented. 12 years later, this technology is far more advanced, but still based on the same idea of decentralization, sharing, and giving the power to the people, rather than having it in the hands of a handful of major companies. 

As a better system, it aims to take the power away from all companies, including those who would log your data for their own purposes, advertisers, and others.

Since then, blockchain technology has entered every other industry around the world, as well. It can be found in gaming, supply chains, content creation, healthcare, identity management, data collecting, and much, much more.

However, its main focus, as well as the area in which it progressed the most, remains decentralized finance. This technology is changing the world one day at a time. At first, changes were small and unimportant. Today, massive, industry-changing deals that include DLT are happening every other day, once again proving the rapid development of technological innovation and financial revolution.

Conclusion

With the speed at which these changes are now happening, it is next to impossible to predict what the world might look like in the next several years. However, from everything that we can see, it is likely going to move towards its safer version, with fast payments, secure data sharing, and greater security of information.

Centralized systems will likely never fully go away. However, there will be a choice for you to make, whether you wish to give control over your money, information, and identity to companies and the government, or to keep it for yourself, and use a community-managed system that has proven to be better and safer even in its early days.

Related Posts
No Comments

Sorry, the comment form is closed at this time.