We Need to Talk About the Blockchain
If you are going to talk about fintech today, you need to get your head around the blockchain ledger, the technology that both underpins the Bitcoin and sits at the heart of the most important debate in the space today.
What is it?
The blockchain ledger is a public record of financial transactions on the bitcoin network. The record grows as “blocks” are added to it chronologically. It’s like a full history of bank transactions and the blocks are like individual bank statements. A copy of this record is stored across of nodes connected to the system. A node is a computer linked in the linked to the network using a client that validate and relays transactions – this is called bitcoin mining.
Why is this important?
The blockchain is what makes bitcoin different from any other digital form of transaction. Its decentralized, there is no single user or company in charge, and all transactions are recorded on the block chain that is public. Roughly every 10 minutes a new block is added to the chain through mining. Some consider this to be a problem, creating problems with storage, synchronisation, and even security. But so far, the blockchain has proven to impossible to mess with.
What has this got to do with fintech?
For banks, the blockchain has the potential to become the model for the future of fintech. The technology has potential be adopted more widely to directly exchange money and assets digitally without relying on expensive middlemen. But banks are also are wary of a currency that is characterized by decentralization, anonymity, and open access. Which is why there is debate over the future of this technology and why blockchain – perhaps more than bitcoin – will shape future of fintech.