Blockchain is a code—a digital ledger software code. A ledger is a collection of financial transactions which records the exchange between parties. It shows what comes in and to whom and what goes out and to whom. Blockchain collects all this information in digital form. It is a decentralised system that can be created and updated anywhere. As the name suggest, every block of data is connected to another block in a chain format. This technology can be used for record keeping in case of any transaction. Blockchain is believed to be relatively more secure, transparent and accountable technology than the existing one. This code can be used to build application that will allow you to keep a record of all transactions without the need of an intermediary.

At present, if there is any transaction that involves multiple people, each step has to be reconciled separately. Blockchain originated as the underlying technology used for Bitcoins.

HOW DOES IT WORK?

Let’s take an example of a car leasing company. In the business, you will be directly or indirectly linked to the emissions regulator, car manufacturer, dealer and the lessee. At present, we have no information of how many cars are manufactured and are readily available for lease. Or how many cars are on lease on road. With blockchain technology, everyone in the car lease ecosystem will know exactly who has taken the car on lease, manufacturing date of the vehicle, inventory and other details. The regulator will also have access to information whenever it wants. Remember that this information will be available only to those who are part of the ecosystem.

Blockchain technology, if implemented, is expected to reduce the duration for processing. Since you do away with intermediaries, it will also help in reducing cost.

WHERE CAN IT BE USED?

With blockchain, seamless access to information can be replicated in any industry where transactions take place. Blockchain is believed to be useful for any sector that has complex and large scale back-office processes that may involve phone calls, emails and paperwork. Similarly, the technology can also be used wherever there is a need for reporting, transparency and dissemination of data. In many countries, including India, different sectors are trying to understand how blockchain can be used. According to experts,it can be very useful for financial services entities such as banks, investors and broking firms.

WHAT NEXT?

Across the world, telecom companies, financial institutions, information technology companies and startups are testing how to use blockchain in various sectors. In the banking sector, banks and IT companies are exploring ways to use blockchain in payments, remittance and security. There are companies that are trying to build applications on top of blockchain for other sectors as well such as property, precious metals and airlines. However, blockchain is not a system that can work in isolation; all stakeholders have to accept this technology to begin with.

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