How Blockchain Technology Could Help Developing Countries Part 4

Banking systems and decentralization of organizations and blockchain networks.

 

Multiple studies have shown that simply copying a banking system that functions successfully in a Western country to a developing country doesn’t work. There are a lot of reasons for this. One of the reasons is that people in the Western countries trust their governments and financial systems much more than people in the developing countries do. For this reason, if a bank were to simply open branches in a new country, people would not necessarily start using them right away, even if the bank has a solid reputation in a different country.

This trust is one of the reasons why blockchain technology has such a huge potential in the developing countries.

The blockchain technology isn’t just about financial transactions. Bitcoin and other cryptocurrency networks are just one of the applications of the technology, the financial one.

In essence, a blockchain is a ledger that can store all kinds of data. On the financial networks this data is about financial transactions, but on a different network it could be around real estate properties, medical history of patients, current location of cargo, creators of music and other kinds of art, and much more.

Blockchains store this data using a combination of tools that include cryptography hashes, consensus algorithms, and the implementation of the idea of difficulty.

 

Why people trust blockchain networks

People trust public blockchain networks for a number of reasons. First, the software of a blockchain network is open-source. Practically speaking, this means that anybody can download the software, inspect it, dissect it, and use parts of the code for any purpose they want. Bitcoin being an open-source network is one of the reasons why today there are so many networks that are similar to Bitcoin. Bitcoin Cash is one of the examples. These networks have simply taken the software of the Bitcoin network and introduced certain improvements. They did not have to create this software from scratch.

Because of all of this, people know that they can trust the software and the software doesn’t have any hidden scripts from the government of their country or some timer that will change how the software works when the software reaches a certain point or a certain date. This is critically important for people living in countries that have experienced hyperinflation or where the government officials say one thing today and do another thing tomorrow, yet stay in power for decades without the residents of the country being able to do anything about it.

 

Decentralization of centralized businesses

All of this is very different how the software works in the world of centralized commercial businesses such as Google, Amazon, Microsoft or Facebook.

In many instances, centralized commercial businesses like Google, Amazon or Facebook, do have a degree of decentralization. This means that Google has more than one server. It has multiple servers and multiple data centers. When you type in the name of the search engine into the window of your Internet browser, the browser opens the homepage of the engine almost instantly no matter where you are in the world. This, however, doesn’t mean that when your request to open the page goes to the same server. It doesn’t. The selection of the server happens almost instantly, yet it depends on a number of factors, such as where you are located in the world and how many busy different servers are at the moment. The same happens with other large websites such as Amazon and Facebook. When you log in into Facebook, your feed also appears almost instantly no matter where you are in the world, as long as you have a fast Internet connection.

 

Decentralization of blockchain networks

However, the difference between blockchain networks and large companies is that the latter are still centralized businesses, meaning that there is a central authority that can decide where the requests go, how many servers the company would have, and when and how the servers will operate.

Nothing of this kind happens on a public blockchain network such as Ethereum or Blockchain. The networks are built around the idea of freedom. People are free to use them to transact on them whenever they like, 24/7, from anywhere in the world. Miners are free to create blocks of a blockchain or to shut down their mining hardware. Users are also free to download a copy of the software and a copy of the full blockchain of a network (a machine with a full copy of a blockchain is called a node). For example, you can see a live map of the online nodes on the Bitcoin blockchain by visiting the following link: https://bitnodes.earn.com/ If you visit the page several times and pay attention to the numbers, you will see that the numbers are changing all the time. Here is a map of online nodes for the Ethereum network: https://www.ethernodes.org/network/1