Since 2000, many new technologies have started to emerge, one of which is the use of digital payment platforms, such as PayPal technology which is very popular among people, even still used today. In principle, the digital payment is an intermediary between two or more parties, which will transact.
Differences of PayPal & Bitcoin Technology
The intermediary must be trustworthy by the person making the transaction, to verify the transaction, record and transfer the cost from the buyer to the seller. Actually digital payments such as PayPal technology is similar to ATM inter-bank transaction providers, such as Link, Prima, ATM together, Maestro and others.
Technological advancements grew, in 2009 Satoshi Nakamoto issued a new breakthrough that can not be underestimated, the new digital payment platform called bitcoin. But between PayPal and bitcoin technology has a quite striking difference.
First, PayPal technology and similar platforms use the common currency used by the community. It was just as an intermediary to conduct electronic transactions. Like the general buying and selling process, the usual currency standard is US Dollar. While bitcoin is a currency of digital form, which is not regulated and recognized by the world's central banks. Even the value tends to fluctuate. Currently, the value of 1 bitcoin is 8613.38 US $.
If you intend to have bitcoin, there are several ways you can do, which is getting it as a payment, buying and 'mining' or 'mining'. The mining referred to here is not in the real sense. But the meaning is to solve a key by using a series of algorithms. The key will be used for transaction verification.
Second, PayPal technology uses third parties, as an intermediary in transactions, while bitcoins do not need them. Instead, transactions using bitcoins will be verified and recorded on an encrypted distributed system, in order to safeguard the security of unwanted crimes. Distributed system is called blockchain.
So, the meaning of blockchain comes from the word Block (special box) is a certain boundary / place / area that is used to hold all item / transaction changes during the chain process. While the chain (chain) is a unique chain record and is the flow of all the consistent stages of a transaction / item.
The nature of the open source blockchain technology makes it widely developed by several parties to create various cryptocurrencies, in addition to bitcoins. One that is also not less popular than bitcoin is Ethereum. By 2017, both cryptocurrencies already have market capitalization of billions of USD.
Generally, in the prevailing financial system, all incoming, outgoing and moving transactions will be recorded in a ledger. It is necessary, so that no money is lost, guaranteed safe and recorded correctly. When using digital payment platforms such as shared ATM, PayPal and others, involving different financial institutions, the party responsible for recording transactions is an intermediary.
In the application of that system, there is one ledger that serves as a record of all transactions, managed by the platform provider. If you want to see the transaction process that you do, then need to ask the intermediary. Centralization of data held only 1 party does have additional points. But it also has weaknesses. An example is the occurrence of hacking or piercing by irresponsible people, to gain profit. So the hacker could have done modifications related to existing data.
This is different from blockchain technology. Because this platform eliminates the existence of intermediaries. No one ledger contains transaction logging, but the transaction will be distributed to the network of the people involved, and the ledger is identical. Even all transactions done, need to be announced to be verified by all computers, before being passed.
Verified transactions will be placed in encrypted blocks, which will be permanently 'chained' with blocks of transactions before and after. That's what causes this system called blockchain. The transaction recording process will be distributed and bound to an encrypted block chain, making blockchain technology highly secure from hackers. Because it requires skill and high ability, to be able to break into the system security system.
The first obstacle is in the encrypted transaction block. If there are hackers who want to break through, then have to hack the transaction blocks before and after. That is, the same person to hack all blocks of transactions that have been done, because they are interrelated, each other.
The second obstacle, recording identical transactions involving multiple servers in the world, if it succeeded in breaking into 1 copy of blockchain, then the hacker should also be able to obtain verification from other blockchain copy server providers. That's why hacking in this system is almost impossible to do, because it has a very high level of security and is intricate to penetrate.
However, over time and the increasing number of users who make transactions, it requires resources and capable computing capabilities. But it has also been thought by Satoshi Nakamoto, by making blockchain technology a distributed system.
Various Blockchain Technological Levels
The use of blockchain technology increasingly widespread dilminati by internet users around the world. The talk about this is becoming more widespread and becoming an interesting topic. Even the theme of this technology has been discussed specifically at the World Economic Forum 2018 held in Davos, Switzerland. In the important international forum, it invites CEO Guiyang Blockchain Financial Co. Ltd. and founder of ACChain Digital Asset Smart-Ecosystem, Wan Jia.
According to Wan Jia, the benefits of blockchain technology are divided into several levels:
- Blockchain 1.0.
In conceptually, coins such as Bitcoin, which are based on nothing but scarcity and proof of work
- Blockchain 2.0.
Coins representing actual participation in ongoing activities or businesses
- Blockchain 3.0.
Moreover, coins in real-world, tangible or intangible assets, which have a quantitative value at any time, one item of code. Blockchain 3.0 is called coins because it has a financial value that can be identified, although not the official currency issued by the state.
Today, using blockchain technology, users can transact virtually to anyone (who also uses the platform), from anywhere, without interference from intermediaries or third parties.