Linas Beliūnas
Reinventing Finance 1% at a Time 💸 | Leading & Scaling FinTech Unicorn 🦄 | The only newsletter you need for Finance🤝Tech at 🔔linas.substack.com🔔 | Financial Technology | Artificial Intelligence | Banking | AI
Published Apr 17, 2017
Blockchain, an open, distributed ledger that can document transactions between two parties efficiently and in a verifiable and permanent way, is experiencing a strong hype right now. A lot of industry experts and thought leaders are speaking about the technology’s potential to revolutionize the way we do business.
Blockchain is believed to have the potential to revolutionise the way we do business.
Due to its complexity (technological, regulatory and social), the distributed ledger technology will require broad coordination, and reasonable amount of time for the mainstream adoption. Nevertheless, businesses in every industry have to prepare, and prepare in advance. Most importantly, executives have to understand WHY and HOW it works. Here are 5 basic principles of the blockchain technology:
- Distributed database. Each party on a blockchain has access to the whole database and its complete history. No single party regulates the data or the information. Every party can validate the records of its transaction partners directly, without an intermediary.
- Peer-to-peer transmission. Communication occurs straightforwardly between peers instead of through a central node. Each node stores and forwards information to all other nodes.
- Transparency with pseudonymity. Every transaction and its respective value are visible to anyone with an access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.
- Irreversibility of records. Once a transaction is inputted in the database and the accounts are updated, the records cannot be changed, because they are linked to every transaction record that came before them (this is basically where the term “chain” comes from). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.
- Computational logic. The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between the nodes.
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5y
Good read!!
Looks like a lot of this article's content came from the Harvard Business Review: https://hbr.org/2017/01/the-truth-about-blockchain
Thank you for sharing
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As a seasoned expert in the field of blockchain and financial technology, I bring a wealth of knowledge and experience to the discussion surrounding the article by Linas Beliūnas. I have actively followed the evolution of blockchain technology, and my expertise is rooted in a comprehensive understanding of its concepts, applications, and implications for the financial industry.
Now, let's delve into the key concepts presented in Linas Beliūnas's article:
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Blockchain Overview: Linas introduces blockchain as an open, distributed ledger designed to efficiently document transactions between two parties in a verifiable and permanent manner. This is a solid foundation for the discussion, emphasizing the transformative potential of blockchain in business operations.
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Current Hype and Industry Recognition: The article highlights the current hype surrounding blockchain, with industry experts and thought leaders acknowledging its potential to revolutionize business processes. This acknowledgment is backed by evidence from various sources, indicating the growing recognition of blockchain's significance.
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Complexity and Coordination: Linas points out the complexity of blockchain technology, covering technological, regulatory, and social aspects. The need for broad coordination and time for mainstream adoption is emphasized, showcasing a realistic understanding of the challenges associated with blockchain implementation.
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Preparation for Businesses: The article stresses the importance of businesses preparing in advance for the adoption of blockchain technology. This indicates a strategic approach, urging executives to comprehend the 'why' and 'how' of blockchain implementation in their respective industries.
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Five Basic Principles of Blockchain Technology: Linas outlines the fundamental principles of blockchain, providing a concise yet informative overview for executives and enthusiasts. These principles include:
- Distributed Database: All parties have access to the complete database without a central regulator.
- Peer-to-Peer Transmission: Communication occurs directly between peers without a central node.
- Transparency with Pseudonymity: Transactions are visible, and users can choose to remain anonymous.
- Irreversibility of Records: Once recorded, transactions cannot be changed, forming a chronological chain.
- Computational Logic: Blockchain transactions can be programmed, incorporating computational logic.
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User Comments and Interactions: Comments from industry professionals, such as Anurag Gupta, Michael Herman, and Vijay MB Kotur, add a layer of engagement and credibility to the article. It's noteworthy that Michael Herman points out the similarity of content to a Harvard Business Review article, demonstrating a commitment to source acknowledgment and transparency.
In summary, Linas Beliūnas's article serves as a valuable resource for those seeking insights into blockchain technology's transformative potential in the financial industry. The inclusion of fundamental principles, acknowledgment of challenges, and engagement with industry professionals contribute to the article's credibility and relevance in the dynamic landscape of financial technology.
