How Big Data Can Help Blockchain

In the last 50 years, technology has advanced at an exhilarating pace. With the advent of the information age, the rate of communication and information exchange has reached light speeds, with the use of fibre optic cables. And this is important to note, since the speed of information dissemination determines how fast technology moves forward. We have the internet and the wonders of cloud computing to thank for that.

Yet in the last 50 years, one technological aspect has remained stagnant – financial technology. The movement of money digitally was thought to be impossible without the use of a third party verification system, because digital data can be easily copied, and therefore, illicitly utilised for their own gain by malicious parties.

Even with the explosion of the internet age along with powerful handheld communication and computing devices, we are still using 60-year old credit card technology to make payments and the similarly archaic SWIFT network to transmit money across borders and oceans. Concerned developers had to intervene, and they came up with a system that is fit for the requisites of today’s generation.

Enter Blockchain technology – a big breakthrough in financial technology

Digital currency has been thought impossible due to a 35-year old unsolvable concern in computer science called the Byzantine Generals’ Problem. This is basically a conundrum on how to forge trustworthy agreements between unrelated parties. Due to this, there is no way to transact digitally without having a central authority to oversee every transaction. That is until the Blockchain technology was developed.

Invented in 2008 and released as open source software in 2009, the digital currency known as Bitcoin became the first practical application of Blockchain technology and has solved the aforementioned concern.

Bitcoin is an open source payment system that can be availed  by anyone, without the need for a third party verifier. It works like physical money, can be stored in virtual wallets, and has its independent value, as global currencies can be converted to Bitcoins and vice versa. The blockchain serves as a digital ledger for the virtual currency.  So, how does the technology work?

What is The Blockchain?

As the backbone of the digital currency known as Bitcoin, the blockchain is a shared, trusted public ledger that everyone can inspect, but which no single entity controls. The participants in a blockchain system collectively keep the ledger up to date: It is also write-only, as you cannot erase entries. It can be amended only by a majority consensus among users, abiding by strict rules set for the community to follow.

The transparent nature of the Blockchain ledger prevents double-spending, and ensures the integrity of each transaction between every user. It is a currency without a central bank. Each block of transactions in the chain stands on its own, time-stamped immutably, and can be used as an infallible record of history. Furthermore, this prevents fraudulent individuals from manipulating the data as well as illicitly procuring digital tender.

The most obvious and practical application of the technology, so far, has been to produce a form of currency. Money, as we know it, is technically a big ledger of debt controlled by central banks. However, blockchains have plenty other use cases because they meet the need for a trustworthy record – a requisite in any transaction that necessitates verification. Legal documents, notaries, deeds, stocks and bonds, land titles come as ideal examples.

For instance, many new startups have been using blockchain technology for a host of other applications. In the Philippines, Satoshi Citadel Industries’ has created a cross-border remittance platform that allows anyone in the world to send money to the Philippines using Bitcoin and the blockchain.

The result? Savings of up to 80% for overseas workers sending money home compared to the likes of Western Union, a big deal in a country that received $27 Billion in remittances last 2014. The trend follows for other nations, including developing countries.

Furthermore, running the global entries of the blockchain ledger through a big data platform identifies the buying and trading habits of Bitcoin users. In the same way, information regarding Bitcoin trends are disseminated on social media; they can also be picked up through data analytics. The identified trends can lead to not only furthering the development of the currency, but also bring to light other possible uses for the technology that powers the virtual ledger.

Expanding Blockchain Functionality

Right now, thousands of the world’s smartest developers and engineers are exploring more use cases for blockchain technology – everything from digital wallets, digital payment systems similar to VISA, asset exchange, public identification, land registration, and even practical usage in future technologies like the Internet of Things. These creative minds are backed by almost $1 Billion dollars in Venture Capital investments in the last 3 years, and have been harnessing the power of data analytics to discover valuable solutions.

It is no wonder that, not even 6 years after its inception, the biggest banks and financial institutions in the world are exploring and experimenting with this technology. NASDAQ and NYSE have also openly invested in and applied blockchain tech to their operations. As the industry matures and develops further regulation, more institutions are expected to follow suit. Governments and even central banks have also openly explored and discovered the benefits of such a technology – the Royal Bank of England, for example, has allocated 10 million pounds for research into the use of the blockchain in governance and finance.

In addition, with big data fast becoming a staple in the modern business setting, the use of blockchain technology is currently receiving added benefits and is widening the fintech industry’s breadth. Companies that handle big data can foretell the rise and fall of Bitcoin value. It can also tell when there’s increased demand and  potentially suppress the volatility that currently haunts the virtual tender. Some of these firms have dedicated their operations to analysing Bitcoin trends, like stockbrokers, and helping the currency’s users make the most out of their virtual money.

This opens the door for discovering new blockchain-related ventures and offering more jobs to the public, as big data exposes more angles in further improving the use of Bitcoin and its digital ledger. Before long, the fintech industry will conquer more ground and could shake up the realm of finance worldwide.

Complementing Bitcoin, big data has also been making waves in the business sector. The use of big data platforms makes life easier for business owners, particularly in the way they meet the needs and preferences of their clientele. Advanced platforms equipped with Natural Intelligence work like the human brain on proverbial steroids. They are capable of picking up patterns within the fed information and generate appropriate solutions.

As a result, companies can sell the right products at the most suitable prices to their targeted demographics. Remarkably, given their merits, big data and the Blockchain can clearly work hand-in-hand to add revenue to any business venture.

All told, the benefits of a global, open, distributed, and borderless form of money and value exchange is hard to overstate. When every person in the world has access to such, the trade of good and services will flourish. In the way the internet, itself, changed the way communication and information exchange worked, the Blockchain will do the same for finance and the global economy.

It was said best by Marc Andreessen, the inventor of the modern web browser, successful VC investor and an avid supporter of Bitcoin’s blockchain technology – “It offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses alike.” The advent of advanced financial technology is upon us, and with the arrival of big data and the blockchain, Bitcoin appears to be only the start of a whole new revolution.

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