The blockchain is a shared public ledger used by all.
Bitcoin has made headlines in the past—most notably for its use in illicit transactions. The shutting down of Silk Road, which used the cryptocurrency for its drug transactions, was a major factor in people’s negative connotation of the technology.
However, a high level albeit casual meeting between NASDAQ execs and Chain.com is looking to change all that. Not only is the Bitcoin technology being explored more in-depth now, some major players are looking to change the very fabric of the monetary system with it.
What exactly is so hot about this Bitcoin topic anyway? Well, first of all, it is not Bitcoin itself which has captured interest. Bitcoin is just an app. It is the underlying technology called the “distributed ledger” or “blockchain” that has garnered huge interest. Basically, think of a full history of transactions. This is the entire blockchain and each block is an individual bank statement.
The blockchain is a shared public ledger used by all. Any and all confirmed transactions by members are included in this ledger. The blockchain contains all details to confirm what went where, and when, and to and from who. Once a transaction is done this “block” is considered complete and a new “block” is generated from here, hence the term blockchain. They are all linked chronologically through this chain.
If this kind of technology makes it way to financial markets around the globe, it can and will make transactions a lot cleaner and transparent.
Each wallet has a private key. It is a secret piece of data that is used for signing transactions and to basically provide proof that a person sending or receiving cryptocurrency is the actual person. Cryptography is used to further secure transactions.If a person wants to transact using Bitcoin or something similar, he or she must first make a wallet to access this ongoing “machine” which will include the transactions into the ledger. This wallet is used only once and it is easy to create a new one should it be needed. Think of an email service where you have an email address and your friends also have theirs too.:
According to Bitcoin, “Cryptography is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. In the case of Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user's wallet or to corrupt the block chain. It can also be used to encrypt a wallet, so that it cannot be used without a password.”
If this kind of technology makes it way to financial markets around the globe, it can and will make transactions a lot cleaner and transparent. It will remove the need for many third parties as anyone within the blockchain can simply check on a transaction that happened.
Bitcoin transactions are also “push” transactions, or those that happen only when the owner sends it. This is in contrast with a credit card’s “pull” on an account. The middleman is therefore cut. Of course, it is an understatement to say that an infrastructure must first be set. This, on a global scale, is much, much easier said than done. But the possibilities of Bitcoin tech is already being explored by big names like NASDAQ, Citigroup, and many others.