Blockchain came to mainstream attention in 2017, despite having existed for almost a decade prior. The author explains how this new technology, perhaps best known for its role in enabling cryptocurrencies, works. In his view, blockchain has the potential to change the way the world does business, and its impact is being vastly underestimated by the accounting profession and society at large.
Cryptocurrencies have become a prevailing topic of conversation, even among the most novice investors. While Bitcoin and Ethereum are the most well-known, few people realize that there are currently more than 1,600 different cryptocurrencies. Even fewer realize that their underlying technology—blockchain—may be a far more meaningful disruptor in the financial sector than cryptocurrencies themselves.
Blockchain, a form of distributed ledger technology (DLT), is essentially a decentralized, trustless, openly auditable ledger that can be shared and viewed by all users. The genesis of the technology is still being debated, but most would say that blockchain coalesced in the midst of the 2008 global financial crisis. Many cryptography enthusiasts in the San Francisco Bay area had become tired of the centralized nature of the banking system and started discussing over online forums ways to shift trust from the centralized authorities. In November 2008, a person or persons writing as “Satoshi Nakamoto” published a now-famous white paper focusing on a peer-to-peer electronic cash payment system. The white paper offered insight into how this technology could be used to replace centralized financial institutions, and it was first known to be implemented in January 2009.
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