May 13, 2022

Blockchain has the power to shape 21st century Says Ezeh Augustine Chidera

Blockchain has the power to shape 21st century Says Ezeh Augustine Chidera

Even as Bitcoin worried regulators, blockchain has firmly captured the imagination of cryptonerds, programmers, researchers, board rooms, central bankers as well as politicians.

It’s the technology that underlies Bitcoin, other cryptocurrencies and an entirely new genre of computer applications known as decentralised applications. The creator(s) of Bitcoin devised a mechanism to issue and track ownership of digital money entirely through computer code running on a distributed network of computers.

In a very subtle way, this idea was a eureka moment for humanity because it proved that facts, such as monetary ownership, could be digitally recorded and seamlessly trusted onto a computer network run by the people of the world without the need for large intermediaries.

By design, it’s a distributed decentralised tamper-proof ledger of records. It offers a way to digitise real world entities, such as information and assets, and ensure that those entities will be exactly as entered into the system without relying on guarantees from central institutions. It should be apparent at this point that blockchain technology takes a direct shot at facilitating peer-to-peer transactions without the need for middle service providers — which could dramatically cut transaction costs.

Finance and capital markets offer the “no brainer” use cases for applying blockchain technology. Bitcoin has proven to be successful in creating digital money and tracking ownership of the same. Today, there exist hundreds if not thousands of cryptocurrencies.

However, as any astute economist will tell you, for an entity to serve as a currency, it must serve three functions: store of value, medium of exchange and unit of account. Contemporary cryptocurrencies are too volatile to serve as a store of value or as a medium of exchange. Stablecoin is one idea that is looking to tackle this problem by proposing to develop low volatility cryptocurrencies pegged to the US dollar or any other index.

Such stable cryptocurrencies could possibly be the first killer app that blockchain technology has been waiting for in order to facilitate mass adoption.