Letter: Blockchain is more likely to boost than replace trades

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Updates to the letter

While your double article in Weekend Magazine (“The Crypto Cult” and “The Wall Street Whisper”, September 11) on cryptocurrencies contained some great ideas, you missed a key point: crypto -blockchain-based currencies, like bitcoin, do not exist. What does exist, however, is an immutable record of the flow of information between users.

Just like forwarding an email to someone adds information to their inbox, sending a blockchain token increases the balance inside the recipient’s network address. Moreover, much of the cryptography that underlies the security of email technology is also applied in blockchain systems. That said, there is one crucial difference: While you can click “reply to all” on an email, you cannot simultaneously send the same blockchain token to multiple people. This allows users to authenticate unique information flows at specific times, much like signing and dating a contract in the presence of a witness.

This can reduce transaction costs in many “paper” industries such as insurance, banking and law. Thus, the application of blockchain technology in the financial sector is more likely to upgrade it than replace it.

Niels pedersen
Senior Lecturer, Manchester Metropolitan University, Manchester, United Kingdom


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