Blockchain to create winners and losers
Ordering a pizza is a fairly mundane transaction for many Australians. But when Laszlo Hanyecz convinced a Florida man to deliver two pizzas for 10,000 bitcoins in 2010, he made history for the first real-world bitcoin transaction. Today, cryptocurrencies can be used to purchase everything from clothing, technology and homewares to travel, artwork and fine dining.
What is most interesting about bitcoin though, is the blockchain technology on which it is based — a revolutionary platform which is spawning applications across a broad array of industry sectors and functions. Just a few examples include smart contracts, neighbourhood microgrids for buying and selling energy, the protection of intellectual property, anti-money laundering and know your customer processes, supply chain auditing, crowdfunding and the sharing economy, to name just a few.
Also known as distributed ledger technology, blockchain challenges traditional assumptions that financial transactions, ownership records or securities registers must rely on a central authority or public ledger.
By using peer-to-peer networks and cryptography, the blockchain creates an online, distributed ledger that is less susceptible to tampering and can verify the integrity of transactions without the need for a trusted intermediary or third party.
This means that for the first time, individuals and organisations can transact or form agreements with known entities or complete strangers without going through an intermediary such as a bank or rating agency to confirm their identity. The blockchain will even handle functions such as contracting, clearing, settlements and record-keeping.
This has significant implications for the entire financial sector, which, due to its centralised and complex nature, has become more vulnerable to crime and fraud.
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Source: Blockchain to create winners and losers – The Australian