Blockchain is the biggest thing in Fintech

Will Blockchain change the world?

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The core component of Bitcoin, the first cryptocurrency, is the Blockchain. Which is a digital ledger, a kind of ‘triple entry bookkeeping’ system, managed by a peer-to-peer network of computers. An enhancement to the traditional double entry system. Where, in any one transaction, a seller books a debit for cash received, while a buyer books a credit for cash spent, in separate accounting records.

With the Blockchain, these entries occur as a transfer between Bitcoin wallet addresses in the same distributed, open (public) ledger. This creates an interlocking system of enduring accounting records. The entries are cryptographically sealed, making manipulating them virtually impossible. So the three entries of the Blockchain are credit, debit and cryptographic seal.

A Bitcoin wallet address is a sort of bank account number. It is a unique combination of letters and numbers. You need one to receive, store and make payments in Bitcoin.

(Note that folks in the Bitcoin world refer to the system as triple-entry bookkeeping. However, it may be a misnomer. The 3rd entry, the seal, is not an accounting entry. But we leave this debate to others.)

51% and double-spending

The Blockchain only accepts a new transaction if 51% of the network’s ‘hashing’ (computing) power validates it. (There is a risk, in theory, that if a Bitcoin miner acquired a majority of the network’s hashing power this miner could execute a so-called ’51 per cent attack’ against the transaction history. For an intro to Bitcoin mining, see the previous blog article.)

The Blockchain protects against ‘double-spending’. Each transaction added to the Blockchain is verified to ensure it refers to money which had not previously already been spent. (Double-spending means spending some money twice or more, something that can happen with the traditional money system.)


Following the success of Bitcoin and its Blockchain, many are now developing their own blockchains. They include consortiums of banks, IT companies and management consultants. Their variations go under the term Distributed Ledger Technology (DLT).

Most are working on ‘permissioned DLs’. Moving away, to some extent, from the original Blockchain concept. Which is an unpermissioned Distributed Ledger.  Bitcoin allows anybody to update its Blockchain. Whereas permissioned models have governance determining who can update the DL.

DLT is of interest to insurance companies too. Permissioned DLs could resolve many of the Wholesale Insurance industry challenges. Including inefficiencies in placement of insurance, reinsurance and claims management, a study by Long Finance found. 

Beyond Finance

People are willing to give away their privacy to gain access to free software, letting companies learn a lot about them and handsomely profit from it. People made Data a big industry and helped corporations like Facebook and Google become incredibly big and powerful, fast. 

Unpermissioned Distributed Ledgers have the potential to change this. It is a new way to send and store data, which is kept private, secure and decentralized, i.e. owned by nobody. 

LTP has identified 21 areas of Blockchain applications beyond Finance, from Authorship and ownership to Supply chain certification in the food industry.


Many say DLT has the potential to change the world. But which model? Unpermissioned or permissioned?

The former gives people their privacy back, but they must rely on a system where nobody is accountable. If nothing goes wrong, that is great. If something goes wrong, they may regret it. The latter will do things differently, but the power may remain in the hands of too few big corporations, with perhaps not-so-world-changing benefits for people.

Likely, both will coexist. They will do so alongside the traditional bookkeeping system. For a (long) while. Decades, due to organisational and social barriers, among others, according to HBR.

There are technology barriers too – the Blockchain is not efficient. All of the nodes of the peer-to-peer network do exactly the same thing: they verify the same transactions, record the same thing, and store the entire history. There is no paralleling, no synergy, and no mutual assistance, according to Kaspersky.

Once these barriers are removed, DLT may well change the world.


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Mauro Tortone

View posts by Mauro Tortone
Mauro advises financial services, technology and mobility businesses and leads the Strategy & Finance practice. His expertise is in strategic change, capital markets and more. Mauro has over 25 years of experience working with banks such as UBS and Deutsche Bank, smaller financials, fintechs and others across Europe, the US and Asia. He sat on the CISI Corporate Finance Forum Committee for ten years and is passionate about sustainability.
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