It all began with the introduction of a new digital currency named Bitcoin. Emerged in 2009, bitcoin arrived in the trade exchange markets. The cryptocurrency revolution leads to the emergence of Bitcoin technology through the first manifestation of Blockchain. Blockchain is a publicly accessible transaction ledger or a data structure that holds transactional records and allows for the secure transfer of records stored in blocks to facilitate digital information flow. Each transaction is digitally signed, also known as a digital agreement to avoid any fraudulent activity taking place or duplication of transactions. The use of robust encryption techniques means that once the data is stored on the blockchain, it cannot be changed.
How Does Blockchain Work?
The blocks uploaded in a blockchain software contain data records that can never be changed once uploaded. Also known as data becoming “immutable”, where data blocks are chained together and made publicly made available. Data is written to a block containing approximately 1MB of data each, stored as transaction data. The blocks are chained together by a step of providing a digital sign-off, or a signature. Any updates made to the block of data will require a second signature and so-on. A block can register more than one transaction if required. A unique code is assigned to a signed block that contains the specific string of data. All signature is hashed for encryption purposes through a cryptographic hash where the unique signature string is hashed to a 64-digit output. Each blockchain transaction, its history and balances are always made public. Transaction ledgers may also be contained within a private blockchain, which is discussed in greater detail below.
The Types of Blockchain
Blockchain technology is not central to just Bitcoin, it has exponentially risen to many different forms. Blockchains may also be public or private. Let’s take a further look at the two:
• Public Blockchain – A public blockchain is exactly what it says it is, public. It is a ledger that contains less or zero accessibility permissions and is accessible to all. All data can be exchange securely to other people without any control. There are no entities that control the network and therefore the public blockchain is decentralized. Bitcoin is a prime example of public technology.
• Private Blockchain – A private blockchain is exactly the opposite of a permission-less network. A private blockchain is accessible to only those that have access controls to participate or have been granted an invitation. Those who have the permission will be granted specific access rights to read, write and audit. The transactional data will never be public because the user’s access to information is controlled. All data records are immutable and cannot be altered at any time.
According to Deltec Bank, Bahamas – “Blockchain technology is continuing to evolve and cannot be considered as a completed technology. It is still something relatively new to industries and many are still exploring the best possible ways to use it.” Banking and Financial markets are especially benefitting from it and contain all the characteristics and features for data and money exchange from a security and transparency perspective. Blockchain does the brunt of the work by ensuring the safety of user experience and transactional security.
Blockchain technologies are here to stay and its application in a wide array of industries has just started.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.