by Larry Oxenham, Publisher
BLOCKCHAIN: There have been a number of inventions/ideas that have reshaped the financial world over time with the computer being perhaps the most impactful. But the computer was invented decades ago and the technology used in the beginning is still used in most places.
In recent years we have seen problems with security, stolen identities and others, all tied into the fact that the the hackers/crooks have become more technically savvy than those who manage our financial systems.
Just when you wondered if there would ever be a way to trust financial transactions 100% along comes the number one innovation in finance, the Blockchain.
I was introduced to the Blockchain through a friendship with Anton Golub, co-founder and Chief Science Officer of the most innovative company in the industry, Zurich, Switzerland based Lykke.
When I originally learned of Lykke I had no idea what the Blockchain was or why it is so important. Then, through the following months, I helped rewrite some of the documents Anton had prepared and learned a great deal.
But I wondered about something: Anton was traveling through Europe and much of the world as a sought after speaker about Blockchain, usually to professional and/or financial groups.We discussed those meetings and the content and then I asked a question:
“Do the people attending really know what the Blockchain is. I mean, they are financial people but this is so new do they understand it.”
Anton said he didn’t know for sure but doubted they knew much, so I suggested he pose the question at his next conference.
He posed the question at his most recent three speaking engagements – one in New York, one in Moscow, one in Lichtenstein – each in front of a combination of industry professionals and others, and it turns out nobody in any of the audiences actually understood the Blockchain. This is astonishing, but not surprising.
The Blockchain is the single most inventive and disruptive force in the world of finance since the invention of the computer and those in the financial industry don’t really know what it is! Most in the audience knew it is used for trading, they knew Lykke is a pioneer, and all had the Lykke app, but ….
If the pros don’t know what the Blockchain is it is worth offering a clear explanation here:
Blockchain is the way cryptocurrency is traded today and will be the way everything – homes, cars, etc. – will be traded in the future.
Blockchain records and places payments info in a massive database and eliminates the need for banks as a middle man.
Transactions are reset every 10 minutes with each 10 minute segment called a ‘block’.
As the 10 minute blocks accumulate they are linked creating a ‘chain’.
Thus the Blockchain.
One of the great things about the Blockchain is these 10 minutes blocks do not sit on a bank computer and are virtually impossible for a hacker to access.
As the Blockchain is better understood and becomes more sophisticated it will change the way financial transactions are conducted worldwide, afford much greater privacy, and maybe most importantly, keep your records private.
It is also worth noting Lykke, thanks to Anton’s mathematical prowess, has developed algorithms that eliminate the number one barrier to Blockchain success: e.g., Blockchain transactions have been limited because each 10 minute segment can only process a limited number of transactions. Lykke’s algorithms allow virtually unlimited transactions clearing the path for mass use.
There’s much more, of course, but Blockchain will be a part of the financial world’s vocabulary going forward so it’s worth understanding.