Blockchain: the innovation reshaping finance

Over the past few years Bitcoin, a digital currency, has become enormously popular — popular enough that its price climbed several hundredfold. Investing in Bitcoin over that period returned many times what the stock market or property would have. Its appeal comes down to convenience, security and ease of use: there is nowhere you need to travel to.

Alongside it sits blockchain, which deserves to be called a genuine innovation in finance, because it makes handling Bitcoin both more efficient and considerably more secure. What distinguishes blockchain is transparency — the data can be inspected broadly and openly, which is what generates so much confidence in it.

The technology grew out of an idea from Satoshi Nakamoto, the same person who created Bitcoin, which is why the two fit together so neatly and so simply. Transfer records are easy to inspect, and trust is high precisely because every user can look up and verify the financial records of Bitcoin users themselves, without going through any intermediary.

Blockchain has another advantage: it removes the fees that would otherwise be paid to a third party — a bank, say — for verifying that money was sent and received. Transacting in Bitcoin over a blockchain does not attract that fee at all, which is a large part of why it has become so widely used.