While we can sit here and argue that blockchain investments are 100% safe, that would be a lie. However, when compared to other investment methods, blockchains are indeed 90% safer, especially when you take the time to research the platform you’re investing in. Let’s see why!
A Closer Look at Blockchain Technology
Blockchain technology was originally created for the purpose of exchanging currency on a peer-to-peer basis. As a result of its inherent security mechanisms, it was quickly discovered that it could be used for so much more, particularly for situations in which critical information needed to be shared in a securely.
Many investment platforms guarantee that your monetary input and personal data are going to be safely protected. But we’ve seen time and time again that hacks can severely compromise this data. And there’s also the concern of your data being leaked when the government mandates a look at it.
Blockchain technology is the best way to resolves these problems. When you invest through a blockchain platform, its distributed nature means your investment is not being handled by a single entity. Instead, your information and investment are being handled by thousands and thousands of nodes, all of which operate independently from one another. And when your information is viewed independently, it’s nearly impossible to make any meaningful use of it.
A well-designed blockchain combines cryptography and mathematics to secure your information. Each block of information is secured with its own cryptographic fingerprint. At the present time, there is no genuine fear of blockchain technology being compromised. Imagine your personal information stored on a blockchain. Hackers would have to take down thousands, possibly millions, of nodes to access it. Perhaps this is why we are starting to see a shift in how companies store personally identifiable information. Instead of hosting the information on a centralized cloud storage platforms, credit and insurance organizations are recognizing the true benefit of distributed storage which blockchains offer.
Why Are Blockchain Investments Safer?
Because blockchain makes use of a decentralized system, it enables all involved parties to create an agreement through an unconventional method. Normally, a middleman of some sort would be used to establish the agreement, such as a lawyer, accountant or some type of government institution. Blockchain technology does away with the middleman by establishing a smart contract. This contract is created by issuing a set of codes that are to be used by the involved parties to exchange money/securities through a method that is safe, secure, transparent, and most importantly, trustable. And since there is no need for intermediary oversight, the cost of the exchange is greatly minimized, making it extremely valuable in the financial industry.
Now let’s take the example of Lambda, a company that provides unlimited storage in a decentralized environment and secures it through a unique mechanism. He Xiaongyang, the founder of Lambda, says,
“We’re committed to solving some of the core issues facing data storage. The platform’s distinct advantage can be found in its use of ‘Proofs of Provable Data Possession’ and ‘Proofs of Retrievability through the verification of node consensus, so as to ensure the integrity and retrievability of data stored on untrusted storage nodes.”
Blockchain also consists of a highly-detailed bookkeeping system or ledger. This system details every transaction, making it impossible to change or delete any of them. Once a transaction is agreed upon, a set of block operations is created and secured in the system. Each transaction is recorded according to a permanent method, meaning the data cannot be duplicated or erased, nor can any type of fake information be formulated.
Benefits of Blockchain Investments
Blockchain data boasts an array of benefits. It’s accurate, time-efficient, consistent, and most importantly, easily accessible. It gives everyone a fair shot to take part in the investment industry. It simplifies trading in stocks and other securities by augmenting the availability of records, speeding up the currency exchange, and making it easy to trace every part of the transaction.
Brokers are often at a disadvantage when facilitating an investment transaction. They have to wait for an extended period of time for money and securities to change hands when an investor places an order. And there’s also the numerous risks involved in trading over other platforms. The data simply isn’t safe and secure because it’s usually transmitted via a centralized storage method, making it is easily accessible to hackers. Blockchain investing mitigates these risks and speeds up the entire process.
Investments made using blockchain technology can be easily scrutinized by other parties involved. Each and every movement comes with its own cryptographic fingerprint, making it simple to pinpoint any suspicious behavior. Each party can receive an alert indicating any suspicious movement. The movement can also be blocked within short notice to enhance the safety of the investment exchange taking place.
Investments that come in the form of stock trading have to follow a set of procedures:
- An order is placed to buy or sell securities for a certain price
- The order is executed according to the requirements
- Broker prepares a contract note
- Shares are delivered and cleared
- Securities then go through a settlement phase
Blockchain investments remove the paperwork aspect of the investment process. This increases efficiency and puts power back into the hands of the involved parties. Furthermore, it automates the process and prevents fraud. Trades are settled according to peer confirmation and the entire process is greatly optimized.
For businesses carrying out contractual transactions and investments, traditional methods can lead to bottlenecks that hinder the growth of a company. With smart contracts and blockchain investments, agreements are validated according to automated processes and carried out in a blockchain environment. There’s no need for a mediator, which saves time and ensures the transaction takes place securely. Even better, because the transaction is performed via a single platform that shards the information into millions of pieces across numerous servers, this mitigates the risk of proprietary information being leaked to third parties that don’t have permission.
Yes, blockchains are only 90% safe, but it’s simply the most secure technology on the planet.
The views and opinions expressed in this article belong to the author, and do not necessarily reflect the position of the Crypto Dost Media Network.