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Secure Payment Systems

Estimated reading: 3 minutes
Blockchain technology relies on encryption.

Satoshi Nakamoto’s Bitcoin, which is known as the greatest post-internet invention, is based on blockchain technology. Blockchain technology has a process that may seem confusing for non-experts. First, it is necessary to mention the P2P, the “Peer to Peer” protocol in order to understand this concept. P2P is a storage system where multiple computers can share data. The system works on the principle that any data is sent to millions of computers simultaneously, not one by one. In this case, data is not stored in a single-center but on millions of computers. Some computers contain all of the data, while others contain a particular piece of it. The person who wants to obtain the data directs this data to the most suitable computers by the system. However, there is no secure structure since there is no encryption. To provide this encryption, solutions called distributed ledger systems come into play. Blockchain technology is another application of these solutions. In blockchain technology, data is handled in blocks, and when a new block is created, the summary of the previous block is added together, and the system chaining completes each other. Thus, in each block formation, the connection with the previous block is not interrupted and it is guaranteed that no one else can interfere. This encryption method means high security in the data flow.

With its high-security structure, Blockchain technology is no longer just about crypto money, but now it has started to be used in many areas such as banking, financial services, and telecommunication. While cryptocurrencies like Bitcoin lay the foundations of another economy over time, blockchain technology paves the way for innovative methods by revealing crypto-based payment solutions. Crypto-based payment solutions work differently from credit cards or other online payment systems. Instead of the existing system, which is based on the approval of the card or account holder and then the buyer withdraws the money, it works as the owner sends the money directly to the buyer. Keeping a record of all kinds of transfers in the whole network instead of a single-center increases the security of the records. This makes blockchain technology a candidate to create the infrastructure of payment and money transfers future.