By Sean Williams February 16, 2018
In case you’ve been living under a rock, cryptocurrencies have pretty much been the talk of Wall Street and the investment community for more than a year now. Last year, the combined market value of all digital currencies added together rose by more than 3,300%, marking perhaps the single-greatest year for an asset class in history. Though things have cooled off a bit so far in 2018, the intrigue that virtual currencies bring to the table hasn’t slowed.
While there are numerous factors that investors and businesses are excited about, arguably none stands taller than the introduction of blockchain technology.
The buzz about blockchain
For those of you who are unfamiliar with blockchain, it merely describes the digital, distributed, and decentralized ledger that’s tethered to a cryptocurrency and is responsible for recording all transactions without the need for a financial intermediary. In other words, it’s a transparent logbook of all transactions that’s unchangeable and doesn’t allow banks to act as middlemen during a transaction.
Blockchain’s entrance on the center stage, which essentially occurred when bitcoin debuted in 2009, is a result of perceived flaws with the current payment platform in place at financial institutions. In particular, blockchain was seen as a way to lower transaction fees by ditching banks as the third party during transactions and to significantly speed up processing and settling times, since blockchain-based payments are proofed 24 hours a day, seven days a week. In fact, some blockchains offer the ability to process transactions almost instantly — even cross-border transactions.
To summarize, blockchain offers the potential for quicker transactions, lower fees, and perhaps stepped-up security as a result of its decentralization, which ensures that no single entity (including hackers) can ever gain control over a network or cryptocurrency.
Though financial institutions are the most logical beneficiaries of blockchain, there are countless applications beyond the realm of currencies. Blockchain can be used to make supply chains more transparent, and they can be a perfect solution for immutable medical records. But for tech-giant Microsoft (NASDAQ:MSFT), blockchain is being viewed as the perfect solution for digital identities.