Page 111

MIDDLE EAST TECHNOLOGY

BUILDING

FOUNDATIONS

FOR THE FUTURE OF FINANCE

Blockchain has the potential to profoundly affect the digital world and become the technological foundation for all electronic transactions over the Internet.

The benefits to anyone involved in trading or pricing assets are clear: the system reduces cost and complexity, creates shared trusted processes, improves discoverability (visibility), and enables trusted record keeping.

Originally designed to provide trust and security for trading with newly emerging cryptocurrencies, the technology enables a trustworthy digital record of asset ownership.

Exploring the possibilities

At its essence, blockchain is a distributed ledger shared via a peer-to-peer network. Each participant has a copy of the ledger’s data, and additions or changes to the chain are propagated throughout the network—but only after the parties in the transaction agree on it. This approach enables participants to dispense with a great deal of review and verification that adds to the cost and time it takes to complete transactions. One of the primary benefits is the transparency the system provides – so that all parties have insight into the transactions that have taken place. Keeping shared ledgers globally in sync ensures that assets (or importantly, parts of packaged assets) can be tracked almost instantly with a high degree of trust. There is added security against fraud or possible ‘dodgy dealing’ as the integrity and creditworthiness of any tradable asset will be easily seen.

While the technology got its start several years ago as a key ingredient of cryptocurrencies, the underlying blockchain technology can make a difference whenever valuable assets are transferred from one party to another. It can now be used to record virtually anything of value, or any tradable asset – whether that’s identity, a will, a deed, or almost any type of secure transfer of information or smart contract. But in many respects, blockchain is lacking some critical capabilities to make it ready for wide scale adoption by business. Until now, approaches to using the system have been narrowly focused, fragmented and inconsistent. Technical hurdles have made it challenging to use while significant security issues have gone unchecked. Many banks and technology companies are now investigating different versions of distributed ledgers inspired by the Bitcoin blockchain code, but only a cross-industry, open standards approach can rapidly move blockchain into the mainstream. Issue 3

111

Profile for Global Banking & Finance Review

Global Banking & Finance Review - Business and Financial Magazine  

Global Banking & Finance Review is a leading financial portal and Print Magazine offering News, Analysis, Opinion, Reviews, Interviews & Vid...

Global Banking & Finance Review - Business and Financial Magazine  

Global Banking & Finance Review is a leading financial portal and Print Magazine offering News, Analysis, Opinion, Reviews, Interviews & Vid...