Explain the major components of blockchain. Be sure to include how blockchain is affecting a global economy and how you see it growing in the future. 

 

There are three key components of blockchain technology. The first is peer-to-peer networking. In blockchain technology, the lack of a centralized server removes the idea that a company or the government has control over the centralized server. All machines in the network therefore will have all the data shared, updated and synchronized. The second is consensus protocols. Within the network, all of the machines connected to it will have to reach an agreement on the addition of new blocks to the blockchain. This is done by having consensus protocols. These protocols are written into the software that is run by the machine ensuring that all of the machines in the network are synchronized and are in agreement at all times. And the last is blockchains. The agreement on the shared data is a blockchain. It makes it easier for machines to verify the growing amount of data held within the network. New data entries refer to previous entries in order to create the link in the chain.

For Bitcoin, for example, the machines that run the software and are connected to the internet, can either be mining software or be a Bitcoin wallet. If we take in deposits and/or withdrawals of Bitcoin, an update of each transaction will be carried out by that machine and then sent to the other machines that are connected within that network. The Bitcoin ledger is then synchronized on all the machines that is connected to the Bitcoin network.

For other crypto currencies, differences can be found within the consensus protocols and the information shared within their own network

Having crypto currencies can threaten the very foundation of the financial system that we all know today. Going back to Bitcoin itself, its market capitalization has now surpassed that of many large companies in the U.S. and within 8 years, managed to rank within the top sixty by market cap. The debate still remains though, is Bitcoin or any other cryptocurrency just a bubble or not. However, the blockchain technology will always have its benefits and impact on not only on the financial systems but on our everyday lives.

In today's system, we have to pay to cover the costs of financial institutions such as call centers, back office teams, its technology costs, etc. Blockchain technology has been regarded then as the proverbial golden egg of the financial system wherein there is a decentralized ledger with security and is readily available across peer-to-peer networks removing the costs that is continuously rising for any financial system. Of course, with any technology, there will be the downside of labor retrenchment but given the positive outlook of it to the financial sectors, most of the company's clients will most likely accept the change as it will not only help the financial system but for the clients as well.

Blockchain technology will not have just an impact on the financial systems, but may impact other industries as well given the opportunity. Such industries include, but not limited to, supply chains, energy sector, healthcare, entertainment industry and government offices.