Blockchain is the enabling technology used in the BC Gateways Platform which allows us to build global communities where participants can securely exchange information using a Single Source of Truth.
Understanding blockchain technology can be a daunting task, but it doesn’t have to be. In this edition of BC Gateways Decrypts, we provide a quick and clear overview to answer the basic blockchain questions and explain how BC Gateways uses the technology.
Blockchain is a distributed ledger technology that records transactions in a public or private network. The technology was pioneered in 2008 by anonymous cryptographic researcher ‘Satoshi Nakamoto’ as a decentralised network for multiple entities to exchange information or anything of value, such as cryptocurrencies, without requiring trust.
It is the latest chapter in the ongoing information revolution we have witnessed in the past few decades, as new resources have become cheaper paving the way for truly disruptive technical advances. Consider how the freefall of computing power and bandwidth costs enabled the PC and internet to radically change the world.
Blockchain technology is continuing the information revolution by capitalising on the rapid decreasing cost of storage to give digital information and assets the same permanence as real-world assets. The distributed ledger technology could change the very nature of the digital world, moving from the internet of information to the internet of value.
Information stored in the blockchain is synchronised simultaneously on every node in the network using a consensus-driven approach so that every participant has the exact same up-to-date record of data.
All confirmed and validated transactions are timestamped, encrypted and stored in blocks of data which are linked from the beginning of the chain up to the most current block. Each new block contains the hashed metadata of all the preceding blocks, which makes corrupting data exponentially harder as all blocks would have to be compromised at the same time across a distributed network of nodes.
Blockchain is considered the next generation of information infrastructure and BC Gateways is using its inherent features to enable the global financial services community to exchange information in a secure and streamlined way, using a Single Source of Truth.
While blockchain at first was mostly known as the enabling technology for faster pseudonymous payments using cryptocurrencies, the reason why BC Gateways and many other organisations have taken interest in it is because the possibilities extend far beyond payments. From deep into the back-office functions of financial services to a vast array of other applications across verifiable supply chain documentation, health records, digital identities, ownership and contracts.
The fundamental breakthrough that blockchain creates across those domains, is the permanence of digital assets. Without blockchain, there is no guarantee in the virtual world that a string of data is indeed the original as opposed to a copy which may have been corrupted.
The only way to overcome the lack of guaranteed data integrity without blockchain is through intermediaries or centralised authorities that register information, guarantee identities and mediate transactions. Systems that depend on intermediaries or centralised authorities require trust, which exposes all participants to varying degrees of commercial, operational and financial risk.
Instead, blockchain creates systems that do not require participants to trust each other in terms of safeguarding data integrity or mediating transactions. The distributed ledger technology is what protects data integrity and effects transactions.
The #BitShares DEX is a great example of what blockchain can do, as it’s a global exchange where investors trade cryptocurrencies safely without relying on a central authority to effect the trades. The ASX announced its plans to upgrade their ageing CHESS system in 2015, but recent analysis showed the new system appears somewhat minimal compared to what could've been achieved.
Paired with the right application and operational context, blockchain has the potential to change the way entire industries work today in a way that empowers individuals and allows companies to better serve their customers.
The BC Gateways Platform uses blockchain to drastically reduce risk levels by providing a Single Source of Truth for all participants. With the distributed ledger forming the backbone of a global community that publishes information and subscribes to the source of truth, BC Gateways creates a level of data integrity which was previously impossible to achieve in a cost-effective way.
Besides risk, the BC Gateways Platform takes much of the complexity out of disaggregated industries such as Wealth Management where inefficient processes like duplicate reconciliations are currently still necessary which increases the probability for errors to occur. Not only does the Platform streamline processes, it reduces costs significantly which enables organisations operating in the Wealth Management sector to rebalance returns to investors and the industry.
