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Need_for_Blockchain.md

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Digtal Money

As the world is growing we are moving from cash to digital mode of payment, now in this we have two ways: The standard way and the Blockchain way.

For making a digital transaction successfull two kind of trust are always required Intermediary trust and Isuance trust.

Trust using Third Party

As we all have atleast done a digital transaction in our lives using a third party application like PayPal, Paytm and all to carry out our transaction.So, what paytm and paypal does is establish a trust between two parties involved in the transaction.

There are generally two kinds of trust required to make a digital transaction successfull:

  1. Intermediary trust - A third party is relied on to make rational and fair decisions.

  2. Issuance trust- A third party is relied on to ensure the safety and security of any value.

Now, using all these third party application is good in its own way, untill there is a data leak or data theft in the central authority, or people start thinking blind trusting these third party application is not that much of an good idea.

So, whats the solution for all these??

WELL HERE COMES BLOCKCHAIN

Bitcoin

So, what do we need now is a system in which we can put trust over the digital space like the internet as well.

Required factors for such a system are:

1.Control- A system with no single point of control, a system in which user holds the control over the things he owns and do, thus creating trust in the system.

2.Transperency- In the system there should be transparency in all the trasactions made through the system, cause a system with transparency will itself gain trust of the users.

3.Security- Now, in the system where is no central authority and all the things are decentralised will be lot more secure than one centralised one.

So, such a system was introduce by Satoshi Nakomoto in 2008 called Bitcoin

BITCOIN a system where we can trust the digital systems or networks without any third party's involvement and which has enough transparency and utmost security.

Now, one of the biggest technologies used in bitcoin is Blockchain

Let, take an example where you want to send 100 Rs to your friend using third party like Paypal. So, here Paypal will establish the trust between you two for successfull transaction.

But in the case of bitcoin it doesn't require a third party to establish trust between you two due to the Blockchain technology that is being used.