Bank of England sees blockchain as the ‘internet of finance’

Rage Comment : The Bank of England believes that blockchain can become the "Internet of the financial industry" because the distributed ledger of blockchain can use digital currency in a decentralized payment system, simplifying complex transactions and clearing and settlement processes. The openness and transparency of blockchain can solve the "too big to fail effect", anti-money laundering and corporate transparency issues, giving us more real and reliable information. Although the financial industry is the fastest to use blockchain technology, blockchain is not limited to this. It can be used in all walks of life, such as universities to record student academic certificates, government taxation, etc. Blockchain can bring many conveniences to all walks of life and is closely related to our lives. Let us wait and see what blockchain technology will bring.

Translation: Nicole

Or maybe a better question is: When did background recording work become so attractive?

For anyone following innovation in the financial technology space, blockchain is the buzzword of the moment. Conferences, news reports, regulations — all are consuming the underlying ledger technology that powers Bitcoin. Since blockchain technology was first introduced, it has attracted about $1 billion in investment to startups.

How did this happen, and why are so many people in so many industries developing this new blockchain-based technology?

To fully understand the potential of blockchain, we need to understand how it works and where it came from. In its simplest form, blockchain is a digital platform that records and verifies transactions, tracing the origin of Bitcoin, which was created in a 2009 white paper by an author who goes by the pseudonym Satoshi Nakamoto.

The white paper outlines the creation of a completely peer-to-peer version of electronic cash that can be sent directly from one party to another without going through an intermediary financial institution. The key to maintaining the integrity of the system is the digital ledger, which provides proof of all transactions in the Bitcoin network by recording the time of transactions in a continuous chain of records. The blockchain's chain of records is an unbreakable, unhackable and crowd-sourced technology.

The excitement about blockchain lies in its potential to be applied to a wide range of industries. Financial services is the fastest adopter of the technology, seeing its potential to simplify complex trading and clearing and settlement processes.

This potential has led the Bank of England (BoE) to believe that blockchain could become the “internet of finance.” Describing the logic behind their thinking, the BoE wrote:

"To achieve this innovation, the most important thing is to introduce 'distributed ledger technology' to allow the use of digital currency in a decentralized payment system. Any digital currency record can be copied and used multiple times. Traditional bank deposits are held by banks, and only banks can ensure their validity. In contrast, the digital currency ledger includes all transaction records of all users and is open to everyone. Blockchain does not require users to trust a designated institution, and users' trust is placed on the network."

Basically, the BoE believes that blockchain can remove the middlemen in transactions and create a purely digital ledger that can exist independently of any single institution and cannot be tampered with. From this level, blockchain is the dream of the entire financial system, solving problems from the "too big to fail effect" to anti-money laundering and corporate transparency through a single and complete installation package.

The impact of blockchain is not limited to the financial sector. Large technology and financial companies have come together to join the Open Ledger project to create a wide range of different blockchain-based projects for different needs (from traditional supply chains to basic management tasks such as vehicle ownership transfer). Some schools use blockchain to record student grades and share academic certificates. At the same time, it may be possible to collect taxes through blockchain in the future.

What makes blockchain technology interesting is that it creates business opportunities similar to other disruptive technologies built on a peer-to-peer model, such as Uber and Airbnb. Like other peer-to-peer applications, blockchain can greatly disrupt the status quo by removing layers of management from banking and financial processes, ultimately providing a range of financial services that simplify high-cost, labor-intensive processes. Although we have not yet seen the emergence of a real-life blockchain Uber or Airbnb, there are dozens of efforts to develop blockchain solutions, and you can imagine what will happen if the right solution is successfully developed.