The Vast Potential of Blockchain Technology

1214218_old_chain_3Next year will mark the 10th anniversary of bitcoin, a global electronic currency invented by a mysterious anonymous figure called Satoshi Nakamoto. The same individual also invented blockchain technology, which has become as ubiquitous a term as bitcoin. But what exactly is blockchain? How does it relate to bitcoin? And why is blockchain so important?

Although bitcoin is built on blockchain, they’re not the same thing. “A cryptocurrency is simply an implementation of blockchain [technology],” says Douglas Heintzman, practice leader for blockchain technology at the Burnie Group Inc., a Toronto-based strategic consulting firm that advises companies on how blockchain — also known as distributed ledger technology — can transform their businesses.

So, if blockchain isn’t bitcoin, then, what is it? Blockchain is a record-keeping system that enables multiple people to agree on transactions without any central arbiter. Blockchains are like roads; many different things can travel along them. Bitcoin is just one example.

A blockchain’s value lies in its ability to remove a central middleman and enable everyone to deal directly with each other, while keeping everyone honest.

For example, when Bob wants to send money to Alice electronically, they need a way for each person to verify and keep a record of that transaction. That may seem simple at first, but what happens if Bob can’t trust Alice? If she receives the money and claims that she didn’t, then Bob is out of pocket.

This article originally appeared on the website of Benefits Canada‘s companion publication, Investment Executive. Read the full article here.