Blockchain to revolutionise the financial industry

Moving money

Blockchain is a new way to record transactions that occur across a huge area. It acts like a digital ledger and keeps track of a wide number of things in addition to transactions, such as agreements and contracts.

Once something has been independently verified to have actually happened, it encodes the record along with others in a “block”, which then gets “chained” in line chronologically.

What this gives is a time line of data, detailing transactions.

However, the clever bit is that the chains of data are spread across thousands of computers across the globe simultaneously. All the computers have to work together to agree on a block of data before it is encoded. Furthermore, each block is unique and can’t be remade; even if identical data is input, the resulting block will still come out different.

What this means is that if a cyber criminal were to try and replicate a block of data, they simply couldn’t, and even if they could, in order to hack the system, they would have to access every database which stores it, thousands of computers spread internationally.

Any felonious changes made to the system will be easily apparent, as the data will stand out as not having been agreed on by the network of computers.

This system is good news for banks. The tech that banks currently use “is getting a little old,” according to Simon Taylor, vice-president of blockchain research at Barclay’s.

One consequence of this system could be cutting down on terrorist transactions. Often, diamonds are used by militias to fund conflicts, but tech company Everledger is a tech company developing a way for blockchain to track and record certifications on each individual diamond. The transparent nature of blockchain will mean that the militias will not be able to use diamonds for transactions that they want to keep hidden.

Technology has, over the last decade, massively revolutionised the way we live and how society is run. Although it will work behind the scenes, blockchain will hopefully help the global community grow.