What is blockchain? At a high level, blockchain technology is a Distributed Ledger Technology (DLT), where each independent user has possession of the entire framework, creating a decentralized and widely replicated “source of truth” when it comes to existing transactions, accounts and underlying information. This decentralization is important because the wide replication and distribution, when shared across many independent users, means the information is highly verified, reliable, and tamper-proof.
This is especially valuable because it allows for independent transactions to occur without a third-party mediator. The reliability of secure transactions without direct oversight from a financial institution or third party opens up the possibility of a cost-effective and consistent way to, among other things, conduct transactions online.
Created by Accident
Blockchain and Bitcoin are inextricably tied. The online currency needed a way to be exchanged, and, to enable Bitcoin’s growth, blockchain technology was developed. Designed with the intent to support Bitcoin, the developers and the world at large realized that the underlying DLT may prove to be more valuable than the cryptocurrency it was designed to support. The fundamentality of the technology makes it applicable to a wide variety of uses and industries that financial institutions, and the business world at large, are only beginning to explore and uncover.
Barriers
There are still major barriers to Blockchain technology, but the value proposed by the technology means it is only a matter of time and effort to overcome and adapt to the current barriers in place.
- Lack of standardization. For retail application, Blockchain is still in its infancy. Tech firms are working on developing the technology for different industries, but there are a variety of players, and no single iteration of the technology has arisen as the mostly likely to succeed and be the most accessible moving forward. Financial institutions are looking to see how the innovating stage of this technology yields itself to producing long-term, reliable partners.
