Blockchain. Cryptocurrency. Satoshi Nakamoto.

What exactly do these words mean? Well, here’s a simple explanation. 

The traditional economy has several issues such as high card transaction fees, zero transparency, and the high population of 1.7 billion unbanked adults. 

To solve these problems, Satoshi Nakamoto devised the first blockchain database and developed the bitcoin concept. 

With this technology he developed, more people had easy access to send and receive payments securely. It prevents tampering with information and also allows the recording and distribution of digital information.

Here is everything you need to know about Blockchain technology and how you can leverage it to grow your business.

Ready to learn?

Let’s get into it!

What is a Blockchain?

A blockchain is a collection of records (blocks) linked to each other. These records are almost impossible to hack or change as data are protected by end-to-end encryption (cryptography). 

Cryptography ensures transactions on the blockchain are verified and audited independently with a low processing fee.

Most people believe that the blockchain was invented by Satoshi Nakamoto when he announced it to the world in October 2008 as part of the Bitcoin Protocol.

However, the early idea behind blockchain technology goes way back to research scientists Stuart Haber and Scott Stornetta’s model of a blockchain. 

Next, we’ll talk about Stuart and Scott’s work and how it has evolved. 

History of Blockchain

In 1991, Stuart and Scott created a solution using cryptography for time-stamping digital documents to secure them from backdating or data tampering. 

Future computer scientists took inspiration from their work, leading to the creation of Bitcoin.

The identity of the Blockchain inventor(s) is clouded in mystery. No one has been able to determine if Satoshi Nakamoto is a person or a group of people, and no face has been put to the name.

All we know is that Satoshi Nakamoto created the first Blockchain and Bitcoin.

Since the creation of Bitcoin and Blockchain, thousands of cryptocurrencies have been created, and they all use different variations of blockchain technology to power their platform. 

As interest in Blockchain grows, significant funds flow into research and development to understand the technology and how Blockchain works. 

In 2019, an estimated $2.9 billion was invested in blockchain technology. This represents an 89% increase from the year prior. The International Data Corp has estimated that corporate investment in blockchain technology will reach $12.4 billion by 2022.

Types of Blockchain

Although every blockchain is similar in that they are a group of nodes working on a peer-2-peer (P2P) network system; there are certain distinctive factors that make it necessary to group them. 

Public Blockchain Private Blockchain Hybrid Blockchain
Decentralized Centralized combines public and private
Permissionless,   Permissioned centralized and decentralized
No access restrictions; Open ledger Has access restrictions; Distributed Ledger  open and distributed ledger
Anyone can be a miner  You need an invitation to mine  
Examples are Bitcoin Blockchain and the Ethereum Blockchain. Examples are Ripple (XRP), Enterprise Ethereum, and HyperLedger Fabric. Examples are the Kadena Blockchain and Dragonchain Blockchain.

How Does Blockchain Work

To explain this, let’s do an illustration with some Lazerpay team members.

Assuming Bee, Fola and Jeremy are to send 50 USDT each to Njoku, and Njoku has 500 USDT in his Lazerpay wallet.

Bee and Fola have 100 USDT each in wallet reserve, while Jeremy has 150 USDT in his wallet.

When Bee sends 50 USDT to Njoku, a record is created in the form of a block, and the transaction details between them are permanently documented in this block. 

This record also holds the number of USDT each person owns. So, after Bee’s transaction, Njoku has 550 USDT while Barakat has 50 USDT. 

When Fola and Jeremy send their 50 USDT, a new record is created in the form of a block for each transaction. These blocks hold the transaction details and how many USDT Fola and Jeremy have left in their wallets.

These blocks are linked to each other as each takes reference from the previous one for the number of USDT each team member owns. 

This chain of record or blocks is called a ledger, and each is shared among all friends, making it a ‘Public Distributed Ledger.’ 

This is what forms the basis of Blockchain. Now that we understand how blockchain works, what exactly can we use this technology for?

Uses of the Blockchain

Blockchain can be applied to various use cases, including financial services, gaming, security, supply chains, and even domain names.

Here are examples of use cases for blockchain across industries.

1. Payments and Cryptocurrencies

As stated earlier, cryptocurrencies are the most common use case of blockchain technology. Crypto payments solve cross-border payments since they are valid anywhere. 

According to Emmanuel Njoku, the CEO at Lazerpay, 

“Africa has an issue with interoperability of currencies. In Europe, you can easily send money from country to country. 

The same can’t be said for Africa; Kenyans can’t spend their shillings in Nigeria, and Nigerians need to buy cedis if they want to spend in Ghana. 

With crypto, you don’t have this problem, the currency is valid wherever you are.”

Many businesses worldwide now accept stablecoins, a non-volatile form of cryptocurrency as a payment method. For example, Nguvu Health is a mental health company that accepts payments in stablecoins using Lazerpay’s API.

Another good example is Oreks Jerseys, a small business owner that receives stablecoins payments from his customers using the Lazerpay payment link. 

To learn more about how you can start accepting crypto payments as a business owner, read this blog post on How to Accept Crypto Payments as a Business. 

2. Smart Contracts

A smart contract is a piece of code that does something if something else happens. Many people call it ‘the if this, then that’. 

Smart contracts are agreements between people that can be automatically executed if certain conditions are met.  They are distributed, and everyone has access to them, which means there are no discrepancies. 

They are also used to remove human error in legalizing contracts and prevent both parties from defaulting. 

Smart contracts are coded on the blockchain and can never be changed. This means once the terms and conditions for partnerships are set, both parties can’t go back on their word. 

One of the amazing use cases for Smart Contracts is it ensures creators get paid for their work.

According to Obiajulu Onyema, author of NFT money, “creators are often cheated out of the full benefits of their work. 

But with smart contracts, artists can encode royalties into their work.  This ensures that they get paid instantly anytime their work is sold to consumers”.

Three Advantages of Blockchain

Since Satoshi published the first bitcoin whitepaper in 2008, blockchain adoption has continued to grow. 

Multiple reasons are responsible for this growth, including its decentralized nature, open and borderless system, and enhanced security.

Industries in finance, health, gaming, and artificial intelligence sectors have adopted blockchain technology due to features that allow it to deliver cost-saving solutions.

1. Permissionless System

Blockchain technology has a permissionless system that allows transactions to occur without a third party’s interference. 

For example, in most cases, when you make a payment via a traditional payment system, you and your bank are not the only parties involved for this transaction to be successful.

Third parties like a payment processor or credit card companies (visa, masterclass) play a crucial role in this transaction.

With blockchain technology, your transaction does not require any third-party involvement as everyone on the Blockchain can see what’s going on (distributed ledger), and your transactions can be approved by the miners.

This is why the Blockchain is known as a “trustless system.”

Ethereum, Bitcoin, stablecoins, and other cryptocurrencies that run on Blockchain use the proof of work or proof of stake to validate new entries on the Blockchain.

This means any miner with proof of work or proof of stake can approve your transaction, removing the need to seek permission from one entity. 

By removing third parties and intermediaries, Blockchain can reduce the overall cost of processing payments and transaction fees.

2. Security 

Blockchain technology can significantly improve your data security and help you curb any fraudulent behavior from your employee or business partners. 

As a business owner, the security of your data is a top priority for you and your business. Data created on the Blockchain have end-to-end encryption and can’t be altered.

With Blockchain technology, your business can create a smart contract on the Blockchain and send it to your business associate, who can only activate the contract when they meet the requirements. These data are protected from your end to theirs and can’t be altered, making them safe and secure.

You can also save your financial records on the Blockchain. This will prevent your staff with ulterior motives from hiding suspicious transactions or altering the company’s balance sheet.

Your data in the Blockchain cannot be altered by hackers. Each user has a copy of the ledger, so the hacker must hack all the users to modify the data. 

3. Decentralization

Data on the Blockchain is stored in many devices across its peer-to-peer network. This means hackers do not have a central point of vulnerability to attack. 

Decentralization of the blockchain also reduces the chances of a technical failure or network collapse because data are not centralized at one point.

So what does this mean for businesses?

It means you don’t have to be worried about network security or availability. The chances of disrupting your payment process due to the network’s unavailability (a persistent case among traditional banks) are almost non-existent.

Blockchain FAQs

1. What are blockchain networks?

A blockchain network is a gateway that allows applications/infrastructure to communicate and access the distributed ledger, and smart contract. The type of blockchain network determines who can join the blockchain and participate in activities on the blockchain. 

Blockchain networks can either be private or public depending on the type of blockchain and how users access its network. Bitcoin network and Ethereum network are popular examples of public blockchain networks.

2. What’s the difference between blockchain and Bitcoin?

Blockchain is the distributed ledger that keeps a record of transactions, and assets in a network. Blockchain is the technology that powers cryptocurrencies and other digital assets. 

On the other hand, Bitcoin is a peer-to-peer digital asset (a version of electronic cash) that allows online payments to be sent directly from one party to another without going through a financial institution. Bitcoin is the first and most popular cryptocurrency.

3. Is blockchain a cryptocurrency?

No. Blockchain is the building block on which cryptocurrencies are built. Blockchain is the technology cryptocurrencies and other digital currencies are built. Cryptocurrency on the other hand is any form of digital currency that exists on the blockchain.

Conclusion

Blockchain technology has valid use cases.

At Lazerpay, we are applying this blockchain technology to solving the payment problem because we believe if payment is broken, commerce is broken and by extension, economic infrastructure is broken.

Payment platforms like Lazerpay have made it super easy to send and receive payment in stablecoins. It is super fast, easy to use, and secure. 

You can send and receive payment in multiple stablecoins, including USDT, USDC, BUSD, and DAI, providing your customers with choices.

Now is the time to leverage blockchain technology and create better economic opportunities and collaboration between countries.

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