Despite its shadowy origins, Blockchain has quickly emerged as one of the great hopes of financial services technology and looks set to solve a number of problems that have continued to plague the industry in the digital-first age.
Perhaps most importantly, Blockchain offers a viable solution to the ‘double spend problem’. A common challenge to many digital currencies, it occurs due to the ease at which digitalized data can be duplicated, allowing a single token to be spent more than once. The problem has implications far beyond currency: any digital asset – from ownership deeds to patents or distribution rights – are left at risk. In answer to this, Blockchain uses a scheme called ‘proof-of work’ – essentially adding, to all blocks of transactions, a processing signature generated by a decentralized group of participants. And as Blockchain is a decentralised system, it doesn’t rely on any trusted third parties to monitor or process the transaction – meaning it can be fully independent. Remaining independent is an important factor, ensuring that transactions can be made easily (24 hours a day, any day of the year, to any location), that there are no hidden fees, and that all data records can be accessed and checked by anyone and everyone, even if the identity of the transactees and the transaction details are cyphered.
Blockchain also brings a number of other important advantages in verifying digital asset transactions. All transactions are time stamped to make clear who owns a digital asset at any time. Using a multi-signature process – in which more than the sender and the receiver sign-off or permission is required for a transaction to go through – more complex transactions are possible. Additionally, as an open source technology, it is accessible to anyone and any business.