Set in Stone
Blockchain is considered as the system behind nefarious darknet transactions by some, but a source of innovation by others. David Lyford-Smith chips away the confusion.
Blockchains are publicly visible and editable ledgers that use complex mathematics to ensure that all parties agree on the current version of the ledger. Adapted from the technology that underpins bitcoin, blockchains can be used for many purposes, offering greater transparency and security. But there are technical challenges to overcome before the most promising implementations can become reality.
The most exciting features of blockchain technology are its resistance to tampering and its decentralised nature. Users can post transactions between each other without waiting on a middleman, and can trust transactions without needing a verifying authority. System failures can’t happen as the ledger doesn’t sit in one place.
However, in order to work as a major element of the financial system, the market needs to invest in research. It is not yet known how the complex work of processing new transactions in a blockchain can be scaled up to the volumes and timescales necessary.
What are the features?
In accounting terms, blockchains are public ledgers. Different implementations vary just how much access users have and how public the chains are, but all blockchains share several features. They aren’t hosted anywhere in particular, but instead are distributed across all of their users; therefore they are immune to outages. Transaction costs are lower than traditional methods, because of the lack of a middleman.
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