When we talk about cryptocurrency, one term that always comes up alongside it is "blockchain," which is the technology that powers digital currencies. Today, Bitazza Thailand presents Token Talk, a new, easy to understand resource for cryptocurrency knowledge for both beginners and professionals. We begin by answering the question: "What is blockchain, and why is it important for cryptocurrency?"
What is Blockchain?
Blockchain is a distributed decentralized digital ledger that connects a network of participants through encryption, allowing everyone on the network to access the most up-to-date information at the same time.
Blockchain is a decentralized database, meaning it can be updated by nodes or participants within a public or private computer network. This is known as Distributed Ledger Technology (DLT).
This technology makes data storage and access more secure than traditional database systems because all data and transactions are stored in a ledger, recorded in chronological order. This ensures that individuals on the network can securely share data, as transactions cannot be altered or edited by any one individual on the network.
To make it easier to visualize, the operation of blockchain is similar to an Excel spreadsheet full of dynamic numbers. Participants can collaborate on this file if permitted. However, the difference is that if an error occurs in the data, you may need to create a new document instead of simply correcting it within the file. Additionally, the majority of those responsible for the work must agree before proceeding.
How Do "Blocks" and "Chains" Work?
The term "blockchain" reflects how blockchain technology and other types of DLT function. When data on the blockchain is accessed or modified, it is stored in a "block" along with data from other transactions.
The transactions recorded in the block are cryptographically encrypted and cannot be altered. The new data blocks are not written over previous blocks. These encrypted blocks are linked together into a "chain," and the transactions are logged in chronological order, creating a history of changes that everyone on the network can view.
Visualize it like a train running along a line where each railcar is a block, and the track is a chain. Just like a regular train, passengers can only board and alight at the stations along this line, which we can refer to as the blockchain. However, the train windows here are so huge, even bystanders would be able to know who is inside the train and where it’s going. The speed of the train also depends on the network traffic and transaction rate and if there’s any obstruction, a delay will occur. The gas fees? You guessed it. That’s the fare you pay for using the service.
Since transactions on the blockchain cannot be edited or tampered with, if a mistake occurs, a new transaction must be created. A new transaction can only be recorded if the majority of the network agrees. In other words, if you have missed your stop, you will need to take another train to get to your intended station.
What Does Blockchain Have to Do with Cryptocurrency and Bitcoin?
Back in 2009, Bitcoin emerged as the world’s first digital currency, created by an individual or group under the pseudonym Satoshi Nakamoto. Anyone could make payments by sending and receiving Bitcoin through a direct peer-to-peer transfer without going through any intermediary.
However, beyond Bitcoin, blockchain technology also emerged during that period as it powered Bitcoin’s transactions. Crypto exchanges arrived during this period, seizing the opportunity to provide a fiat-to-crypto ramp for early adopters, as well as allowing people to trade their Bitcoin for other tokens, which became the key driver for people to buy and sell cryptocurrencies online without relying on banks or other intermediaries. Decentralization has ensured that Bitcoin itself is not controlled by any government or organization.
The emergence of blockchain revolutionized traditional financial transactions. Previously, when we wanted to send money to someone, we had to go through an intermediary like a bank. But with Bitcoin, peer-to-peer transactions became possible, allowing people to transfer funds directly without a middleman.
All digital assets, including cryptocurrencies, depend on blockchain technology. Decentralized Finance (DeFi) is a category of blockchain and cryptocurrency applications and serves as an alternative to traditional financial services that still rely on intermediaries.
DeFi is unique in that anyone who accesses the application can control the changes that occur within it. This means users have direct control over their own funds.
How Does Blockchain Benefit Businesses?
Although blockchain was created to power Bitcoin, it’s not limited to just that. Blockchain is being used in a variety of other business applications.
Thanks to its secure data storage and modification capabilities, blockchain is especially important for businesses in areas like trading and financial transactions. It allows data to be stored with consent from both buyers and sellers, reducing the risk of legal conflicts later.
Take the banking industry as an example. Traditionally, banks required a Know Your Customer (KYC) process, which incur high costs and takes up valuable time for the user. Blockchain and DLT can streamline the KYC process by requiring only a single verification for each customer, reducing costs, improving efficiency, and increasing transparency.
Additionally, banks and stock markets are using blockchain for online payment processing, account management, and stock trading.
For example, the e-LG on Blockchain project by the Bank of Thailand (BOT), which originated from collaboration with six other banks, led to the establishment of BCI (Thailand) Co., Ltd. as the platform developer. The goal is to use blockchain technology to streamline the letter of guarantee (LG) process. What was once a paper-based procedure, which took 3 to 7 days, has now been transformed into the issuance of an electronic letter of guarantee (e-LG) that only takes 1 to 4 hours. Beneficiaries can also manage the LG from multiple banks in one place, reducing the risk of information forgery in the document.
The retail industry also benefits from blockchain technology by managing costs efficiently. Digital transactions enable businesses to conduct transactions quickly, track goods movements between sellers and buyers, and maintain quality control—especially in time-sensitive industries like food, which has expiration dates and requires attention to quality over time.
Global retail giant Amazon has even filed a patent for a decentralized technology system to verify that all the products on the platform are authentic.
Now that you’re just learning about blockchain technology and its advantages, it’s the right time to start your crypto journey with Bitazza Thailand Today! To learn more about the various features and functions of Bitazza Thailand, visit our blog: https://blogth.bitazza.com/en/blog
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Remark: views, information, knowledge, and opinions are considered as content that come from individuals involved. They do not constitute an expression of Bitazza and its employees. Neither the email nor the content presented constitute investment advice.