Blockchain: It's not just cryptocurrencies.
The term 'blockchain' is all you need to remember to understand the entire concept. Let's break it down.
Say you finally bought that thing on Amazon you waited ages for to go on sale and it's registered on the blockchain. Your information block will store:
- Transaction details like 'date, time, and price of your long awaited purchase
- Your 'digital signature' gives you a high degree of anonymity but which can still be traced back to you if needed and Amazon's digital signature
- An algorithmically crafted 'hash' code which distinguishes your block from another's, though your info may be grouped (several thousand!) other peoples' transactions too
- Before the info is inputted into the block, it is verified by a system of 'spectator' computers which verify the correctness of the transaction's date/time etc which is then transferred into the block and given a unique hash
- When the block is added, anyone, including you, can see all the details entered and verified! But they can't see your personal info, only your digital signature
- You can connect your computer as a node and get 'updates' on that blockchain, but what you get on your computer is a copy of the blockchain. The information is spread across; a 'distributed ledger'.
- Hence, it's a decentralised rather than centralised system; no single body controls and verifies the processes in it. To make a change, every computer has to approve that change. Hackers will have a tough time since in theory they have to manipulate the change on every blockchain copy.
In 2017, Allen & Overy and Nivaura—a digital financial instrument streamlining and automation platform—were the first to put a bond in cryptocurrency and fully settle a typical bond transaction on the blockchain.
The FCA approved Nivaura’s blockchain as an independent third party, which removed the need for a registrar to keep accounts of holders; the register became the blockchain.
Essentially, the system simplified the often complex process of issuing beneficial and legal ownership by uniting the two. With this simpler system, the time (and therefore costs) of creating documents for the bond issuance will be significantly reduced.
Think you understand the concept? The next step is then to think about blockchain's advantages and uses within different industries. Conveniently for you, the quiz below helps you with that and more! Research shows that thinking about new concepts in practice allows for 'deep' learning which makes you retain information much longer and more accurately. Have fun and thank you for reading!