Complete Story
05/24/2016
Expert Explains the Possibilities of Blockchain
Nik Nayab, the head of product strategy at Chain, provided a primer on blockchain technology at the AFT Spring Summit at Orlando, Fla.
“The technology that enables the blockchain is very disruptive,” said Nayab. “It’s a new medium for assets.”
Big banks have been collaborating to develop blockchain technology, a public ledger of transactions run without a primary authority that could allow for the exchange of data, assets and currencies more efficiently and transparently.
Blockchain is the technology enabler that supports bitcoin transactions. So the blocks, added to the blockchain in a linear, chronological order, as a virtual currency with no regulating agency or bank. Many fintech companies see the value of the technology but not all buy into the concept of an unregulated currency.
Proponents of blockchain technology believe it could introduce trust and transparency to online transactions. In addition, some industry experts say it could renovate an outdated global banking system and lead to far faster payments.
The bank blockchain-technology partnership includes Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, J.P. Morgan, State Street, Royal Bank of Scotland and UBS. The goal of the initiative is for financial institutions to safely, securely store and share data in a consistent, effective ledger outside a firm's firewalls.
According to Reuters, the venture's initial focus will be on an underlying architecture. The group will collaborate on research, experimentation, design and engineering to help advance state-of-the-art, enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability and audit requirements.
Within the blockchain network, Nayab explained, different participants have keys, they have keys to receive data, and they have keys to spend the data or asset. They control the data.
Some key features of blockchain:
- Ledger – it’s a historical record of trades
- Immutable – once a trade is added to the ledger, it is permanent and unchangeable;
- Distributed –everyone gets a copy and updates
- Cryptographically secure – everyone can trust what’s in it
Over the last year, the notion of private blockchains has become popular in the broader blockchain technology conversation. Basically, rather than having a completely public and uncontrolled network, it is also feasible to produce a system where access is more firmly controlled while still maintaining the limited guarantees of authenticity and decentralization that blockchain’s supply.
Chain’s design principles for building private blockchains based on several characteristics:
- Private and secure
- Fast and scalable
- Programmatic
- Confidential
- Interoperable
- Simple
