What is Blockchain?

A Daring Innovation

2018-02-08

The past year has been full of news about Bitcoin, other cryptocurrencies and the wider topic of blockchain technology – all very interesting innovations that are relatively new to many of us. While our investment strategy continues to focus on reliable, low-risk growth strategies, we are always eager to learn more about emerging trends in business and finance. Your health, wealth and happiness are enhanced by ongoing information, which we’re pleased to share as we come across a variety of exciting and fascinating topics. With that in mind, we’d like to share an overview of blockchain technology – a daring innovation that extends far beyond the world of cryptocurrency.

The basics

A blockchain is a single shared digital ledger that is incorruptible and cannot be altered. It records the history of transactions across multiple computers, eliminating the risk of conflict between separate, individual ledgers. All parties must give consensus before a transaction (a ‘block’) is added to the blockchain (a series of transactions), which prevents tampering and aids in transparency. Using a blockchain also eliminates the need for paper records, making it an environmentally-friendly technology. It is a distributed (vs centralized), permissioned, secured network of irreversible records that are accessible from anywhere in the world and operate in real-time. If you’re a visual learner, this infographic from IBM may help you understand the way a blockchain functions.

Blockchains and cryptocurrencies

Blockchain technology is often associated with cryptocurrencies such as Bitcoin, which have been making headlines in recent months. Essentially, blockchains allow cryptocurrency to be exchanged without a middleman such as a bank or credit union (though there are “miners” who confirm the legitimacy of transactions for a fee). Because of the blockchain structure and the undelayed, transparent immediacy of all blockchain transactions, a Bitcoin or other cryptocurrency cannot be spent twice. This makes it ideal for both spending and transferring money in certain scenarios.

Other uses for blockchain

In addition to personal use for spending and investing currencies, blockchain has proven useful for humanitarian assistance and healthcare as well as government usage. In 2017, the United Nations World Food Program (UNWFP) used blockchain technology to distribute cryptocurrency-based food vouchers to over 10,000 Syrian refugees. The system allowed the humanitarian network to provide access to food relief without navigating complicated international monetary systems (and, while dealing with a demographic who did not have access to personal bank accounts). It was efficient, it was direct and it worked.

Businesses are starting to use blockchain systems for the same reason – they are efficient, you can side-step complicated international money policies and regulations, and it is accessible to consumers worldwide, regardless of location or economic status. There are no remittance fees and it’s instantaneous. You don’t need a traditional bank account to process it, and there is no waiting period. This makes it ideal for transferring money to family members abroad or making philanthropic donations to those in need.

Additionally, blockchain is starting to be seen in healthcare and government models – though not specifically in Montreal, at this stage – both of which are notorious for having dated administrative technology. It’s even being incorporated into voting systems as a way to increase efficiency and accuracy while eliminating voter fraud. Truly, the possibilities are endless – it will be fascinating to see how blockchain technology is used in the years to come.

The bottom line

This post is meant to add to your knowledge on the very interesting subject of blockchain and cryptocurrencies, but should not be taken as investment advice. We do not currently recommend investment in Bitcoin or blockchain technology, but we are happy to discuss this interesting topic and will continue to monitor developments within this innovative new market. As always, our primary objective is to provide effective, reliable wealth management services with a focus on achieving your personal financial goals. Thanks for reading, and please share this article with anyone who may find it useful or interesting!


Sources
IBM, 2017: https://www-01.ibm.com/common/ssi/cgi-bin/ssialias?htmlfid=XI912346USEN&
Forbes, 2017: https://www.forbes.com/sites/quora/2017/11/17/what-is-blockchain-used-for-besides-bitcoin/#6ab4face446e