The Benefits of Using Blockchain Technology for Digital Transactions

Blockchain technology is not just a new technology; it’s a new way of thinking. Goldman Sachs calls it the “technology of trust.” It’s about trust, or better: It’s about replacing trust with technology.

In today’s day and age, we conduct transactions with people worldwide, people we don’t know, and don’t necessarily trust. That’s why we use intermediaries to supervise these transactions and ensure that rules are being adhered to.

One example of such an intermediary is a bank: Banks supervise monetary transactions and ensure that our account balances are always correct. We trust the banking system to execute our transactions correctly.

Everything we do, we use such an intermediary. If we send an email, we don’t send it directly to the receiver; we send it to an email service provider – an intermediary – who then forwards it to the receiver. 

Now bring in Blockchain: The technology enables a peer-to-peer network, in which people can interact with each other directly, without a need for the intermediary. Instead of the intermediary, a system based on mathematics will act as the safekeeper of the data.

How does it work?

Blockchain is a system of distributed computer nodes. Everyone can operate a computer node and can join the network. If a transaction is being made, all nodes on the network together validate the transaction. The system then records the new transaction and distributes a copy of this record to all network nodes. If a malicious actor now wants to manipulate the data, the network will prevent it. As a result, transactions become “immutable,” meaning it is virtually impossible to alter or manipulate data.

This mechanism is not dependent on a centralized entity, but it is based on a distributed computer system that applies a mathematical consensus system. Today’s safekeepers, like the banks or the email service providers, will eventually become obsolete. 

What are the advantages?

This “trustless” system – trustless in the sense that we do not need to trust anymore but rely on mathematics – has significant advantages: 

Firstly, transactions will become much cheaper, as no middlemen are earning commissions. Cryptocurrency transactions, for example, run through a blockchain-based system. The transaction costs are only a tiny fraction of a cash transaction sent through the traditional banking system.

Secondly, transaction speed will be much faster, as transactions involve only two parties and no middlemen. That also reduces the need for bureaucracy.

Thirdly, transactions will be safer, as there is no need to trust third-party intermediaries anymore. Instead of having to trust the bank to handle our data and our money correctly, we trust in the reliability of mathematics.

Long story short: Blockchain is the future, as it solves the central problem of digitalization: It provides a way to transact digital data without anyone being able to manipulate, alter, or delete that data. That’s also why Export Portal is using blockchain technology: It is safe, cost-effective, and fast.