Author: Matthew D Gonzalez

Blockchain technology is getting more popular these days. Since the increase in public curiosity about the world of cryptocurrency, the search for blockchain technology has also increased.

This happens because these crypto assets use a technology called a blockchain. So, the blockchain is a database that cannot be replaced or changed. In essence, blockchain is a technology used to store digital data connected with cryptography.

For those of you who are curious about what blockchain is, this article is for you. Because after this we will discuss the future of blockchain technology: potential applications and implications

What is Blockchain?

Blockchain is a database mechanism technology that enables transparent sharing of information in business networks.

Even so, many other sectors can take advantage of this technological development from Blockchain.

The meaning of the naming of this technology reflects how the blockchain works. Where this technology utilizes computer resources to create connected blocks (chains).

Blocks that are connected are later used to execute a transaction. This technology is quite interesting because it is not centralized. Blockchain can run on its own using a computer algorithm without any specific system that regulates it.

Use of Blockchain Technology

The financial sector is the main sector that takes advantage of this technology. In the financial sector, this technology is likened to a digital cash book that can be accessed by anyone, anytime, anywhere easily without having to get approval from parties or financial institutions in general, such as banks.

This technology makes all transactions in it more transparent and subagencies minimize data misappropriation such as bribery and corruption.

In 2018, McKinsey created a table of blockchain opportunities in various other fields. Starting from the medical sector, agriculture, property, and telecommunications.

Blockchain Working System

The simple explanation is that the blockchain starts when a block stores new data. The system consists of two types of records, namely transactions and blocks. What is unique about this technology is that each block will contain a cryptographic hash to form a network.

The function of the cryptographic hash is to retrieve data from the original block and convert it into a compact string. The string is used as a detection alarm if potential sabotage is found.

Its decentralized nature means that this technology does not have a single authority with full control, but is divided into each computer that has installed special software or software.

Advantages of Blockchain Technology

Every new technological development certainly has its element of excellence. Like in the field of blockchain technology.

Among others are:

1. Transparent Transaction System

This technology is able to store transaction data safely and transparently. When making transactions, there is public access that can be seen by everyone without having to login access. This is of course very different from the banking system or pattern in general.

2. Have Good Data Protection

There is a verification system by miners before canted on multiple computers. The database structure is append-only or only add and does not have edit command access. So, hackers will not be able to change the data.

3. Efficiency and Faster

The conventional currency transaction process will take quite a lot of time and there is a factor of human error involved. However, in blockchain technology, transactions become more efficient, fast, and of course safe.

4. Guaranteed Security

Currently blockchain is equipped with the advantages of cryptographic encryption. So, transaction security is not a problem. Transaction history cannot be changed because encryption uses cryptography. So as to minimize fraud.

5. Better Audit System

One of the important functions of blockchain technology is its suitability. The audit trail of an asset can be known because everyone can see and track transaction data. There is no more potential for embezzling corruption funds because transaction data is public, immutable, and append-only.

The Blockchain Way To Change The World

Blockchain called it a new technology capable of changing the world. This technology has its charm in the eyes of its users, now we will discuss the future of blockchain technology: potential applications and implications, among them:

• Can Increase P2P Interaction

With this technology, peer-to-peer (P2P) interactions can be continuously improved without the need for an intermediary. Like digital currency or cryptocurrency exchanges that no longer require the presence of a professional broker.

• Provides Full Control over its Assets

Assets stored on the blockchain via cryptocurrency do not have rules over asset control like in banking. If the bank goes bankrupt, the assets stored may not return.

In contrast to crypto assets that are stored using blockchain technology. Everyone has full control over their assets without being tied to the policies of the central bank or local government. Users can manage themselves through a crypto wallet which is free to access at any time.

• Encouraging Scientific Progress

Blockchain technology is able to change the scientific progress that is being faced by giving access to everyone through real-time data and eliminating large companies, institutions or foundations from controlling important information. Thus, data on an open blockchain can be accessed and managed for research purposes by all groups.

• Offers Stability

Inflation and instability are always experienced by fiat currencies that are commonly used in various countries. Inflation is caused because the government through the central bank can print as much money as they want.

However, crypto assets stored with blockchain technology can avoid this inflation because of their resistance to inflation. Especially Bitcoin which cannot be produced forever and there are only 21 million worldwide.

• Able to Increase Crowdfunding

Crowdfunding is a way of raising money that businesses do for their products. Investors can make small investments to reduce risk during the company’s fundraising process.

Crypto assets can be used as a tool for fast, efficient and systematic crowdfunding because they use a strong blockchain network and are difficult to fake.

Closing

That’s a discussion about the future of blockchain technology: potential applications and implications, hopefully it can cure your curiosity.

Every goal requires a plan and strategy to achieve it, as well as financial goals we need to make budget planning to make it happen. Here are five easy steps we can take in making a personal and family financial budget.

Start By Setting Goals

The first thing that needs to be done is to write down our financial goals clearly and measurably, one of which includes the targeted amount of money along with the time frame so we can evaluate it. It is like better to have an emergency cost of about 10 million until the end of 2018. Furthermore, the targeted amount of money is divided by the current number of months to find out what the monthly target is.

Know Total Monthly Income

In making a financial budget, we need to know how much income we get each month, both from salary and other sources of income. It is important to remember, what is recorded is the amount of money earned after deductions in taxes or benefits on health or pension benefits for employees, or profits like net income after deducting business operating costs for entrepreneurs, traders, or freelancers.

Calculate Total Monthly Expenses

We also need to calculate how much money is spent each month. When calculating monthly expenses, calculate routine expenses such as monthly groceries, daily meal allowance, transportation allowance, mobile phone credit, debt repayments, etc.), as well as non-routine expenses (such as medical expenses and entertainment). Now for those of you who are confused, to be able to find out exactly how much your monthly expenses will be easier if for the first 3-6 months we record every expenditure.

Create a Realistic Budget

After doing the three previous steps, we can then start making a budget plan by reducing the total monthly income (step 2) with the accumulation of total monthly expenses (step 3) with a monthly target (step 1). If the final value is positive, it means that we already have a realistic financial budget plan that is following the current lifestyle. Conversely, if the final value is negative, it means that we have to re-evaluate our financial goals and check our expenses and income again.

Check Back Goals and Expenses

As already explained, if the budget plan (step 4) is negative then we need to re-evaluate the previous budget plan. Check again which posts can be changed and adjusted, taking into account the basic needs. For example, we can evaluate spending priorities, which ones still need to be included in the budget, and which ones can be eliminated, or reduced in budget value.

Apart from that, we can also reconsider the target of money and time intervals in financial goals, we can also look for other sources of income to supplement our income, in essence, the evaluation process can help us make a realistic budget.

Here are easy steps in creating an effective budget:

1. Prioritize Mandatory Expenses

Mandatory fees are fees that must be paid every month. You can identify mandatory fees as they are fixed, although some like electricity or water bills can vary from month to month. If you must pay a debt, that should also be included in your mandatory expenses.

2. Compare Estimated Costs with Actual Costs

Back to expense history. Compare nominal in several categories. Comparing the estimates with the actual costs to be paid needs to be done. This is to avoid any shortage of costs or any remaining money that can be set aside for savings.

3. Set Spending Limits with Income

Now that you know how much you’re spending each month compared to what you’re willing to spend, it’s time to set a spending limit. Start by budgeting mandatory expenses and subtracting them from your income. The remaining amount is what can be budgeted for your preferred spending or savings goals. What is budgeted for expenses should not be more than your income, otherwise you will find it difficult or you may even end up in debt.

By making this plan it will make it easier for you to use money wisely and not become consumptive, besides that, we can also reconsider the target of money and the time lapse in financial goals, you can also look for other sources of income to increase your income, in essence, the evaluation process can help us make a realistic budget.

Based on the purpose, investments are divided into long-term, medium-term, and short-term investments. Different time frames, of course, different investment strategies and instruments.

Types of Investment Based on Purpose

1. Short-Term Investment

Short-term investments last less than one year to three years. For example, a 25-year-old youth intends to get married in three years. So he needs fresh funds to organize a wedding that is not cheap.

Given this need, the youth are advised to invest in low-risk instruments in the sense that they have stable fluctuations in value, and high liquidity so that they are easily converted into cash, and can generate a steady income. Some of the suggested instruments for him are deposits, money market mutual funds, or short-term government bonds.

Can this young man invest in stocks for this financial purpose? You can, but of course, it’s not recommended. The reason is that stocks are instruments that have high fluctuations in value in the short term. Buying stock is buying a business, and business growth cannot be known only in a short time.

2. Medium-Term Investment

When someone has financial goals between 3 to 10 years, then this can be called a medium-term investment. For example, in the next five years, X must enroll his son at a well-known university in Jakarta. So X needs a sizable fund to pay the entrance fee and the first semester.

Given that his funding needs are more than five years, X can choose instruments with a slightly higher risk than deposits, money market mutual funds, or government bonds, in the hope of obtaining higher yields. The instruments in question are fixed-income mutual funds (bonds), private bonds, and mixed mutual funds.

3. Long-Term Investment

When the investment goal is over 10 years, this investment is included in the long-term investment category. The investment aims to be able to increase the cost of education for children, increase the cost of children’s weddings, buy assets for posterity, and prepare retirement funds.

The longer the investment period, it will be more flexible a person choosing the instrument. They can choose instruments with low, moderate, and high risk, or instruments that cannot be converted quickly. Some of the instruments that can be chosen for long-term investment include precious metals, stock mutual funds, stocks, and property.

The importance of investing in the present is to prepare for a better future. Before understanding the importance of investing, it’s a good idea to have a picture of the future you want. This description can start from investment goals, such as buying a house, planning recreation, wedding capital, and so on. After the goal has been formed, then you can start investing.

Why You Should Invest? Here’s The 5 Reasons

Let’s understand about the reasons why you should invest!

1. Future Profitable Yield

One of the reasons for investing is of course to make a profit. This advantage is often referred to as yield. The amount of return you get also varies, depending on the investment product and the period of the investment product. There is one product that you can use to start investing in mutual funds.

2. Make Life Calmer

The importance of investment also makes life calmer. Planning for future financial needs will certainly make you better prepared to meet those needs. Some investment products can also be measured based on the period you want. The time frame is divided into short, medium, and long-term investments. This time frame measurement is based on goals and financial needs in the future.

3. Affordable Capital

Apart from that, one of the reasons for the importance of investing is that you can start with affordable capital. Some investment products with affordable capital are mutual funds and gold. Mutual funds themselves are investment instruments to accommodate capital for a group of investors so they can invest in the capital market.

The capital to use this product is really low so you can invest early, while gold is an investment in precious metal assets which can be in the form of physical gold or digital gold. You can start to invest in these products as soon as possible.

4. Get Passive Income

By investing, you can get passive income according to a certain period. Passive income itself is income that you don’t get directly, meaning you can still earn income when you are not actively working. Meanwhile, active income is that you have to work every day to then receive a salary every month.

5. Achieve Financial Freedom

Another reason for the importance of investing is the attainment of financial freedom. Financial freedom is a condition where you no longer need to work hard to earn money because you already have enough assets to meet all of life’s needs, both now and in the future. By investing, you can allocate assets to various products so that you can use them according to the financial goals that you have planned.

After understanding the importance of investing, you will be better prepared to face future financial needs to meet your financial goals.

The factor that is quite influential and cannot be avoided on the value of money is inflation. Inflation should be taken into account when making financial planning, including household financial planning.

Inflation causes the price of consumer goods and services to increase so that the expenditure budget will also increase. An increase in the spending budget can reduce the regular budget for saving and has the potential to disrupt future financial plans. Without taking into account inflation, family financial planning may not achieve the goals that have been previously set.

What Is Inflation?

According to some sources, inflation defined as an increase in the price of goods and services in general and continuously over a certain period. The calculations are carried out by the Central Bureau of Statistics for seven expenditure groups, namely food, processed food/beverages/tobacco, housing, clothing, health, education and sports, and transportation and communication. This grouping data was obtained through the Cost of Living Survey.

There are several causes of inflation, namely;

The increase in supply or cost-push inflation that occurred due to the depreciation of the exchange rate, increase in production costs, the impact of inflation in other countries, especially trading partners, increases in commodity prices regulated by the government or administered prices, and a sudden decrease in supply.

Increased demand or demand-pull inflation occurs because total demand exceeds the capacity of the economy, for example by hoarding certain goods. There is a combination in increasing demand and supply.

Expected inflation is when people anticipate future changes and try to adapt, for example, an increase in the price of goods before the holidays even though the stock is sufficient. Increase of the amount of money in circulation. When the amount of money is greater without any change in the number of goods, the value of money will decrease and the price of goods will increase.

If the inflation is higher, then the price of goods is also higher and services in the market, so consumers’ purchasing power weakens.

Dealing with the Impact of Inflation

The impact of inflation that is most felt is the increase in the price of necessities. Spending plans can swell especially with rising food and fuel prices. That way, the thing that must be done immediately is to review the household budget plans, and whether they are still relevant to the current conditions.

Adjustments also need to be made in leisure posts such as hanging out in restaurants or coffee shops, watching movies, or traveling. So that budget savings can be reduced in cost or insensitivity without the need to eliminate the post.

To minimize the impact of inflation, you can do the following things;

1. Start saving

Record the expenditure and determine which budget can be reduced because it is not a priority. Slightly overstate the spending plan figure to accommodate possible future price increases. For those of you who already have an insurance need to re-evaluate the policy. If the current policy exceeds your needs, contact your agent to change the type of protection to better suit your needs. Most importantly, always measure your financial condition and adjust your lifestyle.

2. Increase financial understanding

Learning finance doesn’t have to go through formal schools or courses, now there is a lot of material spread on social media that you should study to help you manage household finances. Keeping up with the development of the national inflation rate or understanding how to invest healthily, is quite important for managing a household. Basic education in finance can protect you from the risks of unpredictable economic changes.

3. Create a backup plan

If the frugal option isn’t suitable for your sustainable plan, it’s time to make another plan, for example by looking for additional income by opening a business or looking for a new job with a higher income. You can also delay purchasing assets that have a high value.

4. Invest

Instead of saving the same as putting away money with monthly discount charges, investing in stocks and bonds can pay off more in the long term. Those of you who are still beginners can start with low-risk investments such as mutual funds. Deposits are also an attractive option because the interest is higher than savings. Also, reserve an emergency fund for urgent needs that come suddenly.

5. Using Insurance

Many think that insurance can prevent risks, even though insurance is protection from the financial impact when a risk occurs. When a risk occurs, insurance guarantees that you will be exposed to the minimum financial impact and can still move on afterward. Having protection will help you when an emergency occurs, especially when there is inflation.

Inflation is not always predictable, so you need to be prepared to deal with it. When planning your finances, remember that the future is full of uncertainty and inflation. Therefore, preparing a mature financial plan is a good decision for the future.