Introduction to Blockchain
Recently, the world of financial services has been fascinated by the phenomenon called Blockchain. However, it can be confusing what people actually mean when they refer to Blockchain.
- In general, Blockchain refers to the technology of a distributed (public) ledger, i.e. a list of transactions that is shared among peers – actors in possession of computing power – rather than stored on a central unit
- Decentralisation is the strength of Blockchain. Because transactions do not call for a central database storage unit, they are immutable and thus Blockchain is a very safe method for people and institutions to exchange information or funds
- The Blockchain itself is just a data structure that consists of an overview of past transactions. The fact the overview is public makes it transparent. This overview provides individual peers the means to review and verify new transactions
- To verify a Blockchain transaction, a peer needs to decrypt the transaction, this is called mining. A peer is rewarded for supplying the computer power for mining
- In the original Blockchain, where Bitcoin transactions are the underlying asset, peers are rewarded in Bitcoin as a currency
The possibilities of Blockchain go beyond facilitating Bitcoin transactions and the financial services sector is starting to realise that. To understand what the possibilities are, click here to read the full overview.