Block Chain technology is seen as the key breakthrough which allowed the development of Bitcoin, the enormously successful cryptocurrency. The Block Chain stands as proof of all the transactions on the network and the block is the live part of a Block Chain which records all of the recent transactions. When completed the individual block goes into the Block Chain as permanent database or ledger. Each block is arranged properly in chronological order and connected to the block next to it. Looking at the banking system for instance, this would mean that all historical transactions ever could be recorded and each individual block would contain a statement of accounts. The added bonus is that this can be produced securely and can’t as yet be tampered with.
The important thing about the Block Chain is that it produces a ledger of transactions rapidly and this has a number of potential benefits for the banking industry itself and other sectors. Certain functions banks perform for instance have always been laborious particularly because of the need for security. International transactions are a key area where this type of development could be used to move money much faster and more securely.
Over 40 of the largest international banks have invested in this technology to develop a consistent, reliable, fast and secure Block Chain of their own. Called R3, this startup company has investment from all over the world to build and research ways that the Block Chain tech could be used in the financial sector. The company is made up of experts from the banking world, Silicon Valley, cryptographers and electronic brokering programmers. If successful this will represent a major leap in the way financial systems are organized.
Further implications of the technology are being realized too. Through a crowdfunding website called Etherum, which specifically caters for new companies wanting to use Block Chain technologies, the world’s largest crowdfunding investment round has been completed. The company called The DAO (Decentralized Autonomous Organization) Organization is a venture capital firm; it effectively chooses new ideas and businesses to invest in in order to increase the fund.
But the DAO isn’t run by venture capitalist individuals. It’s run by a network of machines that operate according to the same basic principles that drive bitcoin. You can buy the digital currency of the DAO and if you put money into the DAO, these machines let you vote on which new ideas it should invest in. The more money you put in, the more votes within the DAO you get. But there is also no one individual choosing investment opportunities, instead the DAO members themselves make propositions for investment and these can be business, charity, social or other important investment areas. Then the choice is made what to do with any spoils, whether to pay dividends or to reinvest to increase the overall fund size. It remains to be seen how well this will work in practice, but the massive support the idea has got suggests this type of investor participation has been widely wanted for some time and Block Chain technology has made it possible.
