Nowadays cryptocurrency has become a buzzword in both industry and academia. As one of the most successful cryptocurrency, Bitcoin has enjoyed a huge success. With a specially designed data storage structure, transactions in Bitcoin network could happen without any third party and the core technology to build Bitcoin is blockchain, which was ﬁrst proposed in 2008 and implemented in 2009.
Blockchain technology no doubt has a bright future; the hype surrounding it almost suggests it could be bigger than the discovery of penicillin, leading to the cure of many ills, in the financial services industry and beyond.
A blockchain is an electronic ledger of digital records, events, or transactions that are cryptographically hashed, authenticated, and maintained through a “distributed” or “shared” network of participants using a group consensus protocol.
Much like a checkbook is a ledger of one’s personal financial transactions, with each entry indicating the details of a particular transaction (withdrawal or deposit, recipient and sender, amount, date, etc.), the blockchain is a complete listing of all transactions, whether financial or otherwise. However, unlike a checkbook, the blockchain is distributed among thousands of computers or “nodes” with a process for validating transactions that utilizes a group consensus protocol. Making an addition to a blockchain ledger requires the approval of the network at large making retrospective changes essentially impossible.
Why is Blockchain gaining popularity
Cost and efficiency
▪ No intermediaries
▪ Reducing the risk of corruption
▪ Reduced transaction costs
▪ Availability of real time and transparent data
▪ Real-time processing
▪ Processing in different jurisdictions / time zones
Regulation and management
▪ Possibility of ensuring the identity of participants
▪ Consensus based on data to improve control
▪ Unchangeable records
▪ Full transaction history for easy tracking
Security and control
▪ Full audit trail of all transactions
▪ Increased security and data encryption
▪ Several ways to avoid duplication
▪ Limited ability to use proceeds of crime
Blockchain technology is an important development in the economy. Blockchain in an effort to transform the way international finance and information technology operate. Navigating and understanding the complex and evolving regulatory constructs around Blockchain ventures is imperative for businesses seeking to participate in this exciting new ecosystem.