- Blockchain is one of the new technologies driving growth in the digital economy
- Blockchain has three main features, veracity, transparency and disintermediation
- Potential applications for blockchain are being examined by many businesses and governments
New technologies are driving growth of the digital economy, with one of these being distributed ledger technology (DLT), and its most common application – blockchain. Blockchain began as the technology behind the digital currency bitcoin, but the potential applications for its use extend far beyond this.
What is DLT and how is it different?
DLT (of which blockchain is an example) uses cryptographic tools and a distributed consensus process to create a significant innovation in traditional record keeping. It has three main features:
- Veracity – multiple copies (as opposed to a single copy) of the complete historical record of ledger entries are each verified by consensus. (Bogus entries are identified and eliminated by failure to reach consensus.)
- Transparency – it is a public record of activity that can be seen by all market participants.
- Disintermediation – it operates using a peer-to-peer network, rather than requiring a specific central organisation.
A distributed ledger overcomes the need for a trusted third party, which can be a significant benefit when there is no clear trusted central organisation, or if the costs of intermediation are high.
What are the applications and implications?
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