Blockchain technology isn't just a more efficient way to settle securities. It will fundamentally change market structures, and maybe even the architecture of the Internet itself.
- Abigail Johnson
I recently started a course by ICAI. It is densely written. But it's free. If you are a CA student (foundation, inter or final level), then do signup with one. Thanks, Ankit Lohiya for recommending me those ICAI courses. I appreciate it
This post is not about investing in bitcoin. Bitcoin is based upon Blockchain. I am talking about Blockchain here.
I did some more research on the topics, and I was awed by the potential of Blockchain.
Blockchain is changing ledger.
Ledger is the framework of civilization. Without ledger, we won't able to track how much money we have. That's how we keep track of everything. And that's one of the reasons why we have succeeded in making cities and efficient markets.
Usually, dual entry system is pretty prevailing and scientific. But the problem is this. That we have learned from Lehman Brothers (if you want to know more, read this case study by Investopedia). Basically, they have been keeping extra sets of books to conceal the fundamental nature of their business operations. And laundered of money for years.
But Blockchain can change it all. It follows a triple entry.
Dual entry system - One transaction = entries in two places
Triple entry system - one transaction = entries in three places.
And that third place would be processed added in Blockchain.
Suppose Kattapa brought some wheat from Bahubali. Entries would be in not only both Kattapa's books and Bahubali. In a third-party book too. That third party is going to be proceeded by Blockchain. I am not going to discuss the technical way how it works. If you want to know, watch this fantastic video by 3Blue1Brown YouTube channel.
This third party ledger is in public and accessible by anyone with an internet connection. But they can't read what the entry is, they can know it happen.) And it's incredibly secure.
Now, our story takes dramatic turn. Suppose Kattapa is greedy and overcast (to show more than actual) the wheat he sent. If in the case of Dual entry system, that would be hard for Bahubali to fight the case. But this time, it was the third entry system. And hence, they can verify which books are correct. Bahubali is happy now.
If you are interested in knowing more, either take ICAI course or read this excellent book that I am currently reading, Blockchain by Stephen P. Williams.