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Blockchain technology is enhancing security, transparency, and efficiency in borderless financial transactions. So, what is blockchain technology and its role in the global trade and digital economy?
Cryptocurrencies and decentralized finance (DeFi) rely on blockchain technology to facilitate smooth transactions. Traditionally, transactions are recorded on a paper or digital ledger for record-keeping. However, following the launch of Bitcoin transactions, blockchain technology has evolved to offer more than just a digital record of transactions.
A blockchain is a distributed ledger system that keeps exact record copies on multiple computers instead of one centralized server. The decentralization makes it nearly impossible for data alteration, as computers are spread worldwide. This ensures that a record kept on this ledger stays transparent and secure.
Cryptocurrency transactions leverage this blockchain power to facilitate peer-to-peer transactions without middlemen like banks. Similarly, decentralized finance can offer lending, borrowing, and trading services on the blockchain.
To make blockchains fast and extremely secure, other technologies such as Layer 2s are employed by Defi platforms. The impact of blockchain technology continues to grow with its evolution and integration with the finance and governance industries, among others.
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