Good Blockchain Primer

Barron’s featured story this week is Beyond Bitcoin: How Blockchain Is Changing Banking. It can be a little complicated but you don’t need to be a tech nerd to get it. The article does a good job explaining how the whole thing works to the average Joe. By now most of us have heard about the Bitcoin mania but have a little understanding on how the whole thing works. Blockchain, the technology behind Bitcoins, is not a fad. It’s the real deal and many industries outside finance, such as medical and insurance are testing.

how blockchain is changing banking
MichaelWuensch / Pixabay

To simply put it, a blockchain is a digital ledger that is kept and validated simultaneously by a network of computers. Think of a shared Excel document that no one person can change without the agreement of the others. Importantly, it allows deals to be made without the blessing of a “trusted intermediary,” such as a clearinghouse. It has many advantages.

Blockchain will gain wider acceptance soon. Why? Well lots of money can be save. But also it has been proven to be secure, reliable, and operates at a lower cost than traditional mechanism. Why is it more secure? True record is kept by all participants and doesn’t depend on one person but by all participants. There’s not a single point of failure. For example, your notary can make a mistake that wouldn’t normally happen.  Executives know they need to understand blockchain, but not everyone is clear yet on how exactly it will help their business. I’m in the same boat. I don’t want to buy or invest in bitcoins, but I understand that blockchain is the way forward.

Excerpt below

Beyond Bitcoin: How Blockchain Is Changing Banking
by By Avi Salzman from Barron’s

The hottest investment of the first half of the year wasn’t, Netflix, or even Tesla. In fact, your broker probably isn’t pitching it, and it is barely even recognized by the Securities and Exchange Commission. Yet cryptocurrencies—the most famous of which is Bitcoin—are shooting out the lights.

Investors who bought Bitcoin for $5 or less just five years ago are millionaires today, as its price has soared above $2,500. Unlucky ones have lost small fortunes simply by misplacing a password, much like leaving a suitcase full of cash at the train station. Bitcoin, which has nearly tripled in price this year alone, is blamed for fueling drug sales and for helping hackers wreak havoc on businesses and governments. On some days, its price swings 20% up or down, often on a whim or a rumor. (See related story: “How to Invest in Bitcoin.”

Full article here