Globalization has overpowered the concept of borders among the states and within the states as well. With the advent of the 21st century, information technology has changed the world order. Every organization is running its business with the help of the internet. Everything has its online presence over the internet, which is a massive change. The Internet era has made everything digital. Financial transactions are also being carried on the internet. However, the central repository of financial transactions is still the bank. It is the digital revolution in terms of financial transactions. Blockchain allows multiple transactions over a secure database without the interference of any third person or intermediary. They are trusted transactions.
Due to BC, people can send money to each other through electronic means without any centralized authority, i.e., bank. Cryptocurrency is the striking example of the blockchain, which contains digital currencies. Apart from central authority, this digital finance has opened up many other opportunities for the private as well as the public sector. BC has immensely boosted the productivity of organizations and opened new markets for digital transactions. It has entirely changed the contemporary business models.
Governments have not opted for the use of blockchain yet due to potential threats. Still, it is highly recommended to implicate the blockchain in government departments and get benefit from the positive aspects of this highly dynamic technology. Governments should support blockchain technology and adopt its innovative aspects in different departments. Policymakers should work on the adoption of blockchain by the government under certain principles. Here we shall discuss a few of the guidelines policymakers should ensure while making a policy statement regarding the implication of blockchain.
It must be ensured that the implication of blockchain technology will be neutral. It will not be sued in favor of or against any company, organization, or person.
Policymakers must ensure that the blockchain technology will be adopted throughout the public sector organizations, and it will be deployed in the public sector.
Research and development:
Policymakers must ensure support in the research and development of blockchain as it is a new technology, and it has miles to go ahead.
There must be a legal framework to support the adoption and deployment of BC technology in the government sector.
There must be certain rules and regulations for the implication of blockchain at the national and sub-national levels.
There should be a flexible regulatory environment without any restriction for this new technology of blockchain so that professionals can experiment to gain new aspects without any fear of law violation.
It is recommended to use targeted regulatory enforcement to incentivize companies to protect consumers.
Prevention of technology:
Policymakers should avoid making such laws and regulations, which serve as a hurdle in applying blockchain technology on the government level.
There should be such policies that promote the exchange of data of computer systems or software for the application of blockchain.
Policymakers should work for the application of blockchain across the board on the international level as well. It will definitely boost the economy of the country.
How blockchain works:-
Blockchain is a digital technology that records the information distributed among the networks, and each network has a similar record. There are three fundamental components of BC technology, which are as follows:
Linked data structure:
Blockchain consists of digital blocks that are sequentially linked with each other and are secure. This sequential order of blocks uses cryptography to create a virtual chain of data. These blocks play a central role in the record of information. This information is usually related to financial transactions, the agreement between parties, and ownership of information.
Peer to peer network:
Peer to peers is a distributed network. Blockchain runs over this distributed network. Each computer in the network is known as a node. The node stores the copy of the BC and authenticates the validity of each copy that can be added to a blockchain’s transactions. It is the nodes that share and connects all the data, information, and updates over a network.
Blockchain works under certain rules and regulations known as the consensus protocol. These rules allow the node to determine whether new information should be added to the blockchain or not. The consensus protocol is designed to ensure the consistency of data among the members of a network.
Blockchain Security Risks:
Due to the digital nature of blockchain, there are security risks associated with this new technology. Though blockchain has a strong counter-mechanism, hackers have developed new ways to undermine the security of this new technology. The following are a few of the common security risks.
It often happens that developers make a small mistake in coding while making a new BC application, which eventually leads to entire applications’ blockage. Hackers identify the bug and successfully attack the system. Small errors, glitches, and poor implementation serve as a security risk and allow hackers to get into the system.
This attack is called an eclipse attack when an attacker attacks a single user by isolating from the decentralized network. It makes fraudulent transaction by making the network fool for accepting the fake information.
A “51 percent attack” occurs on a proof-of-work blockchain when a group of bad actors installs more mining capacity than the rest of the network, enabling them to make changes to the digital ledger retroactively.
Attack on applications:
This is the most common form when attackers attack any software application using blockchain technology. For example, in 2014, a group of hackers stole millions of dollars of bitcoins from a cryptocurrency exchange called Mt Gox due to poor security in that company’s systems.
Due to blockchain technology, it has become easy for you to buy the cbd online while sitting at home. It is a safe and secure electronic means for financial transactions.