Blockchain is here to stay

Blockchain, the technology that underpins Bitcoin, is the talk of the town at the moment. The financial services industry can’t get enough of it. The enthusiasm essentially boils down to the technology’s potential to reduce the financial transaction costs while ensuring robust security.

While Bitcoin is unlikely to be make traditional currency extinct, blockchain has provided the impetus needed for new and innovative research into how the slow and often expensive centralised financial transaction systems that dominate banking, so what is this blockchain? Put simply, blockchain is a data structure that can be used to create digital ledgers of transactions shared among a distributed network of participating organisations.

Financial institutions currently using clearing houses where participating organisations send financial transaction details to be recorded in a centralised registry before the transaction occurs. This approach can be slow, lacks flexibility and increases costs.

While blockchain based financial transaction systems remain experimental there is worldwide interest in the technology and how it might be used to facilitate faster, more flexible and cheaper financial transactions between participating organisations without a central authority.

The promise of a peer-to-peer electronic financial transaction system has led major technology companies to invest in the development of open source distributed ledgers that will allow business and government to implement custom solutions that do not rely on open, public blockchains.

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Source: Blockchain is here to stay – The Australian