The blockchain discussed in this topic as an example is Bitcoin which is technically, “an algorithm that records an ongoing chain of transactions between members of a decentralized peer-to-peer network and broadcasts these records to all members of the network » It was invented by Satoshi Nakamoto in 2008 when he has published his white paper “Bitcoin : A Peer-to-Peer Electronic Cash System” (Nakamoto, 2008).

Haber and Stornetta (1991) were the first to propose a linear hash chain or blockchain. They solved the problem of how to certify when a digital document was created or last changed by timestamping a cryptographic hash of the document. By not timestamping the data itself, the privacy of the content was preserved. Haber and Stornetta’s timestamping proposal also solved the potential problems of collusion and lack of trust by linking hash values together and using digital signatures, which uniquely identify the signer.

  A year later, Dwork and Naor (1992) proposed a proof-of-work system to combat junk Email. Their idea was to provide each email with a header containing virtual postage in the form of a single calculation, which the receiver could verify with very little effort.

This postage stamp was to be proof that a modest amount of CPU time was expended for calculating the stamp prior to sending the email. Whereas an individual email could be sent at a very low cost, the intent was to defeat spammers, who send millions of emails. Spamming would come at a high price. Back (2002) coined the term hashcash to describe this proof of work, the computational cost of producing each hash, a term first used by Jakobsson and Juels (1999).

Benefits of the Blockchain

One of many advantages is that Blockchain combine important properties to foster trust, such as accountability and transparency, which allows trust free interactions between counterparties. The underlying blockchain technology uses consensus mechanisms, hash functions and public and private key encryption to control transactions, which leads to the fact that the user does not have to trust the counterparty. However, the user must trust the network and the underlying blockchain. Thus, it is essential to secure the blockchai against fraud and attacks.

For central bank-issued currencies, trust is established by third parties like intermediaries, and in almost every digital transaction in a fiat currency, an agent is employed to oversee the exchange. Transactions conducted by intermediaries do not only take time, but they also result in a risk premium for the user due to higher transaction costs .

   Blockchain are not restricted to a specific geographic area and can be traded around the world. Therefore, Bitcoin can be used to provide low-cost money transfers, particularly for those seeking to transfer small amounts of money internationally, such as remittance payments . This money can often be transferred cheaper than with central bank-issued currencies, because using Blockchain allows worldwide financial transfer without the need of an intermediary institution. In addition, the speed of money transfer is increased By eliminating intermediaries.

   Blockchain could furthermore solve the problem of the participation in international trade without having a bank account. Blockchain like Bitcoin could help individuals and businesses to facilitate small-scale international trade. Using Bitcoins enables these parties to sell products in exchange for Bitcoin and thereby avoiding traditional e-commerce systems, which often involve having to set up a merchant account with a formal bank.

 Another way of how Blockchain could help to increase financial inclusion in the world is by serving as a quasi-bank account, since everybody with internet access can Download a Bitcoin wallet. This wallet then can be used as a quasi-bank account, where people can Conduct savings, and daily transactions.

   In addition, Blockchain , predominantly in combination with smart contracts, can contribute to strengthening social trust and fighting corruption through a more transparent contract system. Citizens can use the publicly available record data of the cryptocurrencies in the blockchain to monitor the way in which the state funds are used. It would also allow governments to track their spending better and to improve their budget allocation.

Applications of the Blockchain

  Many applications of blockchain technology exist, but we focus our attention on Cryptocurrencies.

Bitcoin (cryptocurrency known as BTC) was the first example of a Digital asset, which has no backing or intrinsic value, based on blockchain technology (Nakamoto, 2008 ; Bohme et al. 2015, for a review).

It is unneccesary to know your peers in a blockchain or to trust them.

It is also possible to design a blockchain so that only specific trusted parties have the Ability to add to the ledger. Private, permissioned blockchains are a source of considerable interest for many central banks (MAS, 2017 ; Bundesbank, 2017 ; SARB, 2018). In contrast to cryptocurrencies such as bitcoin, trust is necessary in the permissioned blockchain, because the central banks actually ‘’own » the coins, i.e. as a governing layer they have the right to change the supply of coins (Bordo and Levin, 2017).

Any type of transaction, for example, a financial contract for any type of property Transfer, can be put into a blockchain. Given its immutability, a blockchain provides an official record of the contract and a single agreed-upon version of the contract, which is unlikely to be disputed.

     To summarize, a blockchain is distinguished from an ordinary distributed database by its unique structure, which linearly connects smaller pieces of the database, or the blocks. The chaining comes in the form of a cryptographic hashing function. Any change to history will break the chain on a particular copy of the database. When a chain is broken, the network fixes it by replacing any corrupted block with a valid block.

In conclusion, we can say that Blockchain are green technology, they do not pollute, they do not required the destruction of forest , they rather keep the environment save and blockchain has nothing to do with climate changes. Blockchain technology are accessible by anyone from anywhere in the world. The most important thing is that blockchain technology abound many project that can be benefit for anybody in the real world.