Louis OngBlockchain Professional
Louis Ong is a blockchain industry consultant who has been enthusiastic about new technology since he was a young boy. He co-authored the book "Blockchain: A History," and is co-founder of The Internet of Things. He is also director of... (Read More)
How Blockchain Affects High Finance
Blockchain technology will revolutionize the way we do finance. Blockchain can't replace the old legacy finance systems, but can add new layers of transparency and security. In spite of what critics and skeptics might argue, this is the great undeniable advantage it has over the existing systems. The finance industry will witness dramatic changes as a consequence of blockchain technology. The value of blockchain can be realized by enabling the transfer of value between parties. As more and more projects are conceived with this underlying technology in mind, a great number of companies will need to implement some advanced blockchain software, while at the same time, a number of existing and innovative companies will continue to pursue these innovative applications.
Blockchain delivers a better future
At last year's Blockchain Summit in New York, we demonstrated how blockchain can help bring together people and companies who love technology. As the technology continues to grow in value, more and more of our members are eager to learn more about it. We know blockchain's promise is endless; in fact, we are already building the infrastructure for a decentralized, distributed, secure global financial system. Some of the main benefits we could expect however are as following:
- a) reducing the costs of transaction verification processes in financial services;
- b) improving transparency of data storage and transfer;
- c) improving security of money; and
- d) encouraging financial transactions through smart contracts.
These are just a few of the myriad benefits of blockchain technology.
Blockchain technology in the commercial space
Innovations can't be limited to just financial transactions however. Companies are also seeking to create a variety of innovative solutions to address real-world problems.
A variety of blockchain and distributed ledger technologies, are also making history in the commercial space. A number of notable companies have entered this space in blockchain's recent formative months. It should be noted however that most of the current companies will face serious headwinds in terms of the market due to their inability to scale and develop the technology at a rapid pace.
This is not necessarily a bad thing, however. Many of these organizations have been in a long-term funding cycle, and are in a position to become more sustainable. For example, several large companies with global operations have recently entered the blockchain space. All of these companies are looking to make large bets on the platform and to grow profits. The more business and research opportunities they can offer, the better the future looks for these companies.
The challenges that still lie ahead
The road ahead for blockchain technology looks challenging, but with a potentially significant reward further down the road, after the initial hype has disappeared. The blockchain seems like a great idea in theory, but what can users do before it takes off? How, and when will applications get implemented to increase decentralization and privacy, and keep transactions confidential?
We have our eyes on the technology itself, but there is something that we haven't seen as much as we'd like. Bitcoin, and the blockchains that have been formed around it, have so far shown promise in a variety of ways (the latter being a real issue right now with the bitcoin cash development), but in reality have little to offer the average user. Many businesses can't compete with the blockchain, as these companies, along with many individuals, use their personal money for everything from paying for goods and services, to getting credit cards and buying the right to buy things online. So the only thing that bitcoin has, really, is value. Most people can't really afford to use bitcoin at the moment, and that's where its value should lie.
There have been a number of approaches to increasing the scalability, privacy, and anonymity of bitcoin, to varying degrees. The most important new development to improve scalability is the lightning network. In order to achieve this, all data from lightning nodes is compressed as follows:
The compressed information is first loaded into a compressed-format file, which is then compressed on a fast-protocol-by-fast-protocol basis to a file which is then compressed to a compressed-format file on an average speed of the same or faster for each stream. At no point is the files compressed on the order of megabytes.
There are some caveats with this approach. If the stream contains information which is too large or too small for compression (such as large chunks of plaintext and/or large amounts of meta-data) then the compression algorithm is disabled, which results in all compressed information getting lost or delayed, but all available data is delivered (in one piece) in the compressed-format file. This will cause the Lightning Network to be more vulnerable to attacks such as replay attacks in order to prevent the network from becoming unbroadcastable (even with fast and large-protocol architectures).
Although it remains to be seen whether this approach can work, it would address most of the legitimate criticism we have seen of the Bitcoin protocol and blockchain technology in a broader sense.