(This answer is taken from my book Innovate the Next). Decentralisedconsensus is the ability of participants on a tributed network to reach perfect agreement on a shared database, without the involvement of a central authoritative figure. With Blockchain currencies, the transactions are approved by decentralised individuals who approve based only on that it is a legitimate transaction and no other reason whatsoever. Not politics and no politics.
Though the traditional banks charged zero, the account holders are still paying indirectly through monthly account fees.
R50.00 worth of Ethereum, from a Luno wallet to a MyEtherWallet account, cost R0.59 and took 1 minute.
A R50.00 transfer from a Luno (digital currency exchange) wallet to a Bitcoin wallet created on Blockchain.com took 9 minutes and cost R2.21.
A R50.00 EFT transfer from Standard Bank to ABSA bank took about 11 hours and was free.
Mybroadband.co.za has an easily elaborative fee and time comparison article titled, ‘South African banks vs Bitcoin and Ethereum – Transfer times and fees[i].’ Ethereum is another Blockchain currency.
This verification system is quicker than using normal banking transfers; taking approximately ten minutes to two hours; whereas a traditional EFT can take more than a day to finalise.
This verification is called mining, and the users are rewarded with coins of that currency. In the case of Bitcoin, Bitcoins will be awarded.
Blockchain is a system where the first and any other subsequent transactions are recorded onto a ledger among a distributed network of users. All subsequent transactions are verified, in terms of where they come from, by those multiple autonomous users.
Central banks are cut out.
Then with a decentralised consensus system such as Blockchain, currencies like Bitcoin came into play.
Imagine if country X places sanctions against country Y and stops accepting Y’s currency. Imagine then if X has sanctioning allies or is powerful enough to bully other countries to sanction country Y. Country Y’s currency could lose significant value or even collapse.
When you pay into an account in another country, your country’s national payment system and that of the county you are paying into (both of which are run by reserve/central banks), will authorise the payments.
There are fees to this and it takes time to clear. Although the payment might not incur fees on your account, the person to whom you are sending the money will pay them either directly or indirectly via their monthly banking fees. Actually, even though it may seem free to you, the payer, you are expected to pay service charges on your bank account every month; the ‘free’ transaction might be included in the perks your account carries.
When you send or pay money over the internet in your country, your bank and the bank you are paying into make an agreement to allow the payment. This goes via a central bank’s transaction clearing house run by your country’s central/reserve bank. In South Africa it is called a National Payment System.
The money or currency of a country is designed and printed by a central reserve bank. They are the central control of currency.
A centralised consensus system is, for example, your country’s currency, also known as fiat currency.
The underlying principle operation of decentralised consensus technology is that it should be tamper proof, permission-less, resistant and not have centralised control.
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Click here for the explanations of the other components of the 4IR (5G, Quantum Computing, Biotechnology, Autonomous Vehicles, 3D Printing, Decentralised Consensus, Iot, Nanotechnology, AI And Robotics).
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