Created by the mysterious hacker known as Satoshi Nakamoto, the blockchain technology — the distributed ledger technology that underlies the Bitcoin virtual currency — Blockchain has the potential to upend industries from finance to real estate to entertainment.
In the simplest terms, the blockchain transfers value from one party to another over the Internet. That could be money, a share of stock, a property deed, a digital royalty—even a vote cast in an election.
Today, such transactions often pass through multiple intermediaries to be validated, cleared and processed. An authority stores and mantains them in central ledgers. Examples of Authorities are:
- a central bank in the case of financial transactions or
- the Mortgage Electronic Registration System (MERS) for mortgages.
The blockchain distributes the validation and storage of transactions over many computers in a secure and public way. Furthermore, it eliminates the need for a middleman. In doing so, it drastically reduces the time and cost to process a transaction to close to zero.
Alex Tapscott, CEO of Northwest Passage Ventures, an advisory firm in the blockchain space and author of an upcoming book on the subject, says blockchain technology represents the next generation of the Internet, what he calls the Internet of Value.
While the technology—both the original Bitcoin blockchain and new variations of it—has sweeping potential to transform vast sectors of the economy, the first blockchain applications are taking root in two areas:
- financial services
- creative industries such as music and media.
(Used with the permission of http://thenetwork.cisco.com/)