It is difficult to find someone who has not heard about cryptocurrencies, bitcoin, and blockchain in recent years. At the same time, the essence of these technologies is vague for most individuals who do not use these services actively. There is the popular opinion that blockchain and cryptocurrency is the alternative type of money and financial system that is anonymous and safe (Deirmentzoglou et al., 2019). In general, this perspective represents the main characteristics of blockchain technology, even though it needs to be a comprehensive view of the topic. It is possible to assume that blockchain is the innovative technology that revolutionized the financial system and the system of informational exchange in recent years.
Therefore, blockchain technology is one of the innovations that gained public popularity in recent years. Even though it was created in 2008 by the pseudonym Satoshi Nakamoto to distribute bitcoin cryptocurrency, it became popular among the general audience several years ago when the bitcoin rate became high (Deirmentzoglou et al., 2019). The first investigations on the topic started at the beginning of the 1980s when the first protocol that reminded the blockchain was proposed (Deirmentzoglou et al., 2019). It remained the underresearched sphere of cryptography for several decades, even though many people worked on improving blockchain technology (Deirmentzoglou et al., 2019). Hence, Satoshi Nakamoto optimized the existing information on this technology and made the first decentralized blockchain.
The characteristics of the discussed technological innovation determine the peculiarities of its practical use. Blockchain’s complicated structure allows people to preserve their anonymity in sending and receiving money (Deirmentzoglou et al., 2019). This technology does not have centralized control, which allows its users to remain unknown. It differs dramatically from the traditional banking system and even online payment methods that operate according to similar principles (Deirmentzoglou et al., 2019). Among them is the need to verify the account and the personality of the individual who sends and receives funds (Deirmentzoglou et al., 2019). It prevents fraudulent activity because all users are verified and operate according to the laws.
The anonymity aspect of blockchain is connected with significant controversy in recent times. This technology is widely used for money laundering and financing terrorism, drug selling, and human trafficking, making the blockchain a severe problem for national security (Deirmentzoglou et al., 2019). It is impossible to control the transactions and determine who sends money and receives it. In recent years, state officials have undertaken numerous attempts to make blockchains more regulated (Deirmentzoglou et al., 2019). Among the initiatives proposed by the American government was the need to use verified personal accounts to exchange cryptocurrencies like bitcoin and to send money to the authorized bank account (Deirmentzoglou et al., 2019). At the same time, this initiative does not control all transactions and financial operations in the blockchain system. There are still many opportunities for fraud and illegal actions using cryptocurrency and blockchain.
The essence of this technology does not allow the government and legal authorities to control the movement of cryptocurrencies. It is vital to understand the peculiarities of the blockchain to understand the topic. First, it is the example of online data synchronization, defined as distributed ledger technology (Deirmentzoglou et al., 2019). The blocks of information are protected using cryptography, which makes blockchain a safe technology (Deirmentzoglou et al., 2019). At the same time, it has a high degree of anonymity because the data is managed by a network of peer-to-peer computers that do not require central administration as part of the distributed ledger (Deirmentzoglou et al., 2019). The participants of the blockchain are called the nodes, and they operate using the protocol of consensus algorithm that allows them to add new blocks of transactions and analyze the existing ones (Deirmentzoglou et al., 2019). This data shows that the technology is regarded as the safe and anonymous way to send money, leading to the significant spread of cryptocurrencies in recent years.
The peculiar detail is that the popularization of blockchain and cryptocurrency production is connected with adverse environmental and economic consequences. For instance, the desire of thousands of people to start mining cryptocurrency led to the consumer’s need for powerful personal computers (Deirmentzoglou et al., 2019). As a result, many households began to use significantly more electricity for mining. In addition, the market tried to satisfy consumers’ need for personal computers by manufacturing more items. American officials reported the excessive consumption of electricity by ordinary citizens, which led to problems in the energy sphere (Deirmentzoglou et al., 2019). These details show that blockchain technology is connected with national security risks and adverse environmental effects.
Blockchain is a vivid example of technological innovation that changes human life significantly. Even though not all people understand the essence of these changes due to the complicated character of technology, it started to integrate especially into individuals’ lives. It is possible to hypothesize that blockchain technologies will revolutionize the financial sphere in the near future and change how people send and receive data.
Reference
Deirmentzoglou, E., Papakyriakopoulos, G., & Patsakis, C. (2019). “A survey on long-range attacks for proof of stake protocols.” IEEE Access, 7, 28712-28725, 2019. Web.