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crypto-currencies-and-the-blockchain

What Are Crypto-Currencies And The Blockchain?

When you hear the word “crypto-currencies” it sounds cryptic. Who would have thought that something that sounds so obscure would be challenging the centuries-old order of state-back currencies?

When people think of crypto-currencies – whether it’s Bitcoin, OneCoin or others – they think of the unsavory, mysterious operators somewhere offshore away from regulatory oversight. Of course, the financial services industry is heavily regulated, especially in the United States.

Confirming these perceptions, however, crypto-currencies – and their associated blockchains – are waiting to be regulated at the same level that other investments are.

It’s quite clear that the markets are ahead of the regulators in relation to crypto-currencies and blockchain. PricewaterhouseCoopers wrote in its 2017 Global Fintech Report that funding in blockchain companies has increased 79% from 2016, which amounted to the US $450 million. Moreover, 77% of financial institutions surveyed are anticipating integrating the blockchain into their firms by 2020.

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What is a Blockchain?

How can something both be blocked and connected in a chain?
The blockchain may sound complicated, but let’s take a crack at explaining it.
At its core, a blockchain is an online decentralized ledger. That is, a blockchain is similar to a written record maintained by a computer network. Transactions are encrypted and recorded on the ledger; subsequently, they are “blocked.” Mining machines verify each block by placing a date and a time on every transaction. After the transaction is verified, itis connected to other blocks. This link ensures that transactions are almost impossible to modify for nefarious purposes.

What-is-a-blockchainWhat Are The Blockchain’s Implications For Financial Markets?

In a nutshell, financial transactions can now be made without a financial institution like a bank. In other words, anything of value can be easily and safely sent to anyone – in, at most, a few minutes. In many ways, the blockchain resembles the internet itself. How financial institutions respond to crypto-currencies and the blockchain will be worthy of our attention in the coming years.

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