The blockchain protocol (a form of a ‘distributed ledger system’) was originally designed as a platform to process Bitcoin transactions. The protocol enables peer-to-peer transactions and eliminates the need for a trusted intermediary to verify and process the transactions.
The blockchain protocol as a platform is actually independent of Bitcoin, and is therefore transferable to other applications. Naturally, because blockchain was conceived of as supporting a specific digital payment system, the initial and most obvious use of the blockchain outside of Bitcoin is “fintech” – technology-based payment and financial transaction systems. The goal of recent experimentation and development in fintech is to reduce inefficiencies in the existing payments, clearance and settlement systems. Conceivably, many of these functions could be conducted through a “smart contract” – a completely automated process, executed via a software application that runs “on chain.” In pursuit of these goals, many in the financial services area have made significant investments in research, development, and pilot programs, in many cases through coalitions or in partnership with large technology companies as well as with blockchain-focused startup companies.
Beyond fintech, however, blockchain offers many other opportunities. The digital values that are tracked and processed through a blockchain implementation can represent any other type of information or assets. This capability has evoked the early development of new applications and technological developments involving many industries beyond financial services. Continue Reading