There is an increasingly common consensus among experts that blockchain has the potential to radically alter global finance, and international finance centres (IFCs) the world over are taking note. While some IFCs remain on the periphery reservedly waiting to see what this new technology will bring, others are taking the plunge to embrace blockchain and to introduce new regulatory frameworks that will support business in this area. In 'Blockchain and Offshore: Jousting for the Competitive Advantage' we unpack blockchain to look at its application in practice. We also assess the opportunities blockchain delivers, the threats it might pose to elements within financial services, and identify which IFCs are leading in its development
David Shrier, Associate Fellow at Saïd Business School explains blockchain in simple terms.
The two questions I inevitably get, when people hear that I know something about blockchain, are:
1. Can you explain it to me?
2. What is it actually good for anyway?
Let’s start with the first question, and then we will delve into the second question as it relates to financial services. We are going to take a functional perspective focused on how to apply blockchain, rather than get mired in the technical details of how it works. You don’t need to know physics or how to design an electrical wiring diagram in order to turn on a light switch.
What is Blockchain?
At its very heart, a blockchain is a kind of database that is primed to resist attacks or change. This makes it harder to commit fraud, and it is less expensive to maintain records of asset ownership on a blockchain.
People often talk about a ‘ledger’, another word for a database. If you think about it for a minute, a bank or asset-management firm is essentially a giant ledger book. A client makes a deposit, and the entry …