Imagine this situation: you inhabit London and you wanna buy a household in San Francisco. The house costs million dollars… What comes in first? Your repayment or the handover of keys? If you eventually spend first, you might fall into a scam… maybe the house doesn’t actually exist or it’s maybe not owned by anyone you contacted. Don’t forget that you reside 1000 miles from there. You never saw that individual. And, think me personally, you won’t be 1st, nor the 2nd individual whom lost money through on line scams. Absurd as it appears, this is one of the most complicated dilemmas we have in economics: trust. But I understand what you’re thinking: you clicked this video clip anticipating one thing about blockchain, cryptocurrencies or bitcoin… what does this have to do with of that? We’ll see right now.

Nowadays, we all have heard of BITCOIN. I’m yes numerous of you also understand other cryptocurrencies like ETHEREUM, LITECOIN or RIPPLE. If you have dug deeper into this matter, you might have heard about another term: BLOCKCHAIN. For numerous, this cryptocurrency world is the ultimate revolution that'll end with governments and banking institutions. For other, this is just another monetary bubble that'll make it easier for crooks and terrorists to conceal their money from authorities. Regrettably, the reality is way more boring than this… Bitcoin trade reaches handle Barclays for British transactions But hold on just another! If you thought cryptocurrencies had been just a strategy to avoid fees… We also have news available… The Swiss municipality of Chiasso will let residents spend their fees in bitcoin, its mayor has established. Let’s start from beginning: BLOCKCHAIN. Blockchain is a technology, just like Virtual Reality or the peer to peer file transferring system.

As with every technology, you'll make use of it for numerous things. One is cryptocurrencies and one of those cryptocurrencies is BITCOIN… but it's maybe not the only one! Many people think these brand new coins will substitute legal fiat money, that's dollars, euros or other currency. But it doesn’t have to be that way! Actually, cryptocurrencies can do other things, and we’ll just take a look at some of them. But now, the real question is… What is blockchain about? What's it utilized for? And many notably… why are banking institutions beginning to make use of it? Today, we're gonna respond to all of these questions but, before we do, let’s just take a look right back at history.

WHAT IS BLOCKCHAIN APPLIED FOR? Look, BitCoin was created in 2009. None the less, the technology it's considering, the Blockchain was developed in 1991. Let’s observe it works without even mentioning Bitcoin. Why? Because it's crucial to comprehend that Blockchain is utilized for other things. And since this is a complicated matter, I asked Fonseca, one of the hosts of Spanish VisualPolitik channel to show it to you by drawing! Let’s go back toward example of house in San Francisco, that one that costs million dollars. To buy it, you have signed a contract with the owner but… just how do you understand he or she is gonna fulfill the contract? How do you understand the house exists if you haven't seen it in reality? Usually, we use a trusted 3rd party like a notary to verify it. This notary will verify the house exists, and you talk toward owner, who’s willing to hand over the keys whenever he gets the money.

This is the way any conventional agreement Works. Therefore has numerous dilemmas. First, numerous 3rd events suggest numerous charges and countless waiting any time the notary, the real state agency or other party wishes to verify one thing. But there is an even even worse problem. If somebody hacked the computer of one of those 3rd events, he could alter the terms of agreement. This means… conventional contracts aren't as safe as they seem. And this is in which blockchain goes into the picture. Inside situation, as an alternative of making use of a traditional agreement, we could make use of a so called SMART contract.

This is some software that executes automatically whenever one thing takes place. Inside situation, you could keep your million dollars in a special account, so that within moment whenever you start the home of your house, a sensor will notice your existence and BOOM! The smart agreement takes your million bucks from that special account and send it toward seller. Whenever the key doesn’t work because you’ve been tricked, then, the agreement wouldn’t execute. okay, okay, all of this appears great… but who's going to validate all of this? Well, within situation, we don’t need 3rd events or center men anymore. No notaries at all. Inside situation… we have… a NETWORK! A network composed of all the people that use the blockchain.

Here is an example: PROPY is a company that provides property sales internationally through blockchain. Well, within situation, all the vendors and purchasers inside this platform would be nodes of community. And whenever you're wondering… the answer is NO. No company has compensated us doing this video clip. We utilized that company name just to offer a real life example. Therefore well, the great innovation of Blockchain usually its users will constantly have a copy of agreement. So these is a point of verification.

And whenever one copy doesn't match the copy of other node, the system will consider this fraudulence. However only that! This agreement will be stored in what we call a BLOCK. And this block, simultaneously, is stored in a chain of obstructs. This is why we call this system blockchain. Therefore, if a hacker wishes to alter our agreement, however have to get into all the computer systems from all the people of our blockchain… simultaneously. As you can imagine, this is way harder than getting into one computer, regardless how protected it's. Now you might wonder… so… Anytime I start making use of some Blockchain service… will I have all the registers and transactions that happen done in? The answer is YES.

In fact, if you wanna have BITCOIN, you should download ALL of the blockchain, which now's over 160 gigabites. Now I can hear numerous of you saying ‘Come on, Simon! That’s incorrect! We do have a bitcoin wallet and We didn’t have to download all of those gigabytes!’ Definitely you do! Within situation, my friend, everything have is a light coin. This means, someone downloaded those 160 gigabites and now that individual is permitting you make use of Bitcoin through his or her host. This said, Blockchain is beginning to be utilized for all kinds of things. As you have seen, some organizations provide property addresses smart contracts. But there are other applications. You'll have internet site web hosting with blockchain, so many computer systems inside a network would have the data. Other companies provide medical documents storage, etc… But okay, we’ve already told you what Blockchain is about… there is another component which is… What do banking institutions have to do with of this? We’re gonna check that out now.

SURVIVAL OF FITTEST If there is one thing that creates all kinds of gossip, blended signals and conspiracy theories… it’s cryptocurrencies. You just should google the name of any famous company, followed by the word ‘cryptocurrency’ and you will get some weblog that claims that firm wishes getting its cryptocoin, or the other, or both things simultaneously. The information sound is so pervasive it is very nearly impossible to split the wheat from chaff. And this normally a heads up available dudes whom might wanna start purchasing this industry: view out! I’m maybe not suggesting maybe not doing it. But be careful because there is countless buzz. And this is why, doing this video clip, we chatted right toward sources so we could corroborate that is real. BBVA and Indra will make the World´s first blockchain based business loan In this situation, Indra is a Spanish engineering company and BBVA is a large Spanish bank.

The idea is pretty similar to what we said towards house in San Francisco. Inside situation, BBVA indications a contract with INDRA and all the people inside the blockchain will have a copy of exact same. What’s the advantage of all this? It would prevent internal corruption. Some people should exaggerate the cost of some building to get some profit his pocket. But if they have a smart agreement, and everyone has a copy of this one, they can monitor every deal. This means that both the company and the bank are protecting on their own from unique workers. But we aren’t only discussing loans right here! As we said before, Blockchain is utilized for other things. And, apparently, Spanish banking institutions want to pioneer this. Here is another example. Santander to introduce 1st blockchain based International cash transfer service In this situation, we're speaking once more about reducing verification times. You see, any time you make an international money transfer, you have countless intermediary banking institutions. For instance, if you wanna send 1000 USD to a friend in Germany, somebody has to verify that you have 1000 USD less and your friend has 1000 more.

Add to this the dilemmas from currency exchange and you have countless intermediaries that should communicate and verify every step of procedure. Businesses like RIPPLE usage blockchain doing this in a matter of seconds. And this is why Santander will now start making worldwide transfers from day toward other. Actually, both Santander and BBVA happen purchasing cryptocurrency organizations for years. There are all kinds of blockchain platforms that the main European banking institutions are people of. From Wetrade toward Spanish Alastria. How a great deal of a future do these projects have? We don’t understand. But plainly, it shows an interest from conventional banking institutions in maybe not lacking out these technologies. Now I understand everything are thinking… so far, we just discussed quicker transactions and safer contracts… nothing actually exciting, right? In which usually revolution some people are discussing? Well… think me personally, there is a potential revolution.

But we will mention that in following months. Meanwhile, don’t forget to subscribe to VisualPolitik, and click on the bell icon so you don’t miss any of our posts. Now it’s your turn… so far, we discussed banking institutions making use of blockchain technology but… what towards cryptocurrencies? Yes, Barclays is offering solutions in Bitcoin but… Will they make use of it as a normal thing? Will we see brand new kinds of solutions many thanks to cryptocurrencies? Please, keep your answer in comment area below. Additionally, don’t forget to go to our buddies from reconsider media podcast, the podcast that provided the sounds within video clip that weren't mine.
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