A Beginner's Guide to Blockchain
By IBF Posted 2yr(s) ago Reading Time: A few minutes
Blockchain has become the buzzword not only in the financial services industry but across other businesses as well. It is attracting billions of dollars in investments and is poised to transform many businesses and industries in the way contracts, processes and records are identified, shared and stored.
While many know blockchain as the technology behind bitcoin, its applications and uses have wide-reaching implications and benefits beyond digital currencies.
What is Blockchain?
Most people would go through a trusted middleman like a bank to make a transaction. But with blockchain, consumers and suppliers are able to connect directly without going through a third party.
Blockchain is basically a database or "digital ledger" that maintains a continuous and growing list of transactions.
Using cryptography to keep transactions secure, blockchain maintains a “digital ledger” of records for every party on the network to see. This network is a chain of computers that must all approve an exchange before it can be verified and recorded.
The following diagram and video will tell you more about the blockchain process and how it works.
What are the key features of blockchain?
1. It is publicly shared through servers where the transaction data is created.
2. It is decentralized with no single authority to approve transactions.
3. It is secure because records are irreversible and cannot be revised.
4. The different computer servers are bound by consensus to provide a seamless transaction.
OCBC is the first bank in South-East Asia to use blockchain technology for its local and cross-border payments. This payment solution is designed to improve efficiency, transparency and security, in addition to reducing cost and enhancing customer experience.
Jointly developed by OCBC Bank and BCS Information Systems (BCSIS), the blockchain platform allows interbank payments between banks in Singapore and overseas without a need for payment intermediaries.
This payment blockchain solution has four key benefits:
1. As data is recorded in a digital ledger which cannot be revised or tampered with, it is highly secured which cut down on fraud risk.
2. With no middleman involved, the funds are transferred directly from bank to bank in a straight-through-process, reducing time drastically.
3. Transactions can be easily tracked since there is a clear record of all data.
4. Removing intermediaries and manual processing will help to reduce cost.
OCBC is also looking to extend the use blockchain technology in their other financial products and applications.