Nobody wants to look silly. But, what are they really all talking about? Do these terms have a recognised meaning in industry? Is there something positive that your business can harness from all this?
We aim to make things clearer for you. Part of that involves breaking down what is going on and helping you identify advantages for your business. In some ways there can be too much information and it can be overwhelming. A recent study on competition in Fintech opened with a list of 55 abbreviations used throughout the study. I don't propose sending you to sleep going through them all. Instead, lets step through some key terms.
FinTech - when people talk about FinTech they mean Financial Technology. This type of technology is new and innovative. New should not necessarily mean scary but it's natural for business to be wary of changing tech. FinTech competes with traditional methods. This competition can lead to improved delivery of financial services. Competition is a key driver in improving outcomes for market participants and consumers. Excitingly, FinTech has the possibility to revolutionise financial inclusion.
Blockchain - is the ledger technology that sits behind the likes of Bitcoin. Bitcoin is famously known as the original or genesis cryptocurrency. So lets take it back a step. In 2008 Satoshi Nakamoto published a paper entitled "Bitcoin: A Peer to Peer Electronic Cash System". No one really knows who was behind the paper. Satoshi is thought to be a pseudonym for a number of individuals. The paper itself focused on eradicating the issue of double spending and the need for a trusted third party. Rather than having a trust based system the paper put forward the idea of a decentralised system. Crytographic proof sits at the heart of this. At a basic level this consists of an encrypted and an unencrypted part or a private key and pubic key. The combination of the two creates a digital signature.
What started out as an effort to improve electronic payment systems turned into a revolution. Those immersed in the industry advocate focusing on the technology behind Bitcoin - the blockchain - and the opportunity it can provide.
You may sometimes here blockchain being referred to as DLT, Distributive Ledger Technology. The ledger provided by blockchain is a universal public ledger. It is seen to have a proof of work and proven technology.
P2P - is the abbreviation of peer to peer, one of the founding elements. The network is not centred or regulated anywhere. There is consensus but no ownership. Those is the network can interact directly without the need for third party like a financial institution. The P2P element of blockchain cuts out the middleman reducing cost and enabling opportunity.
As crypto stores a value it is better to think of it as an asset class than a currency. Once you start to think about cryptoassets you can focus on the potential opportunities. Here are some examples of blockchain being used today:
- supply chain and trade finance, IBM and Maersk have come together in a joint venture to improve cross border shipping through blockchain.
- tracking ownership of digital assets and physical assets, be that proving ownership of digital art or tracking the ownership of diamonds. Everledger enables tractability which is reducing the risk of fraud in the diamond industry.
- verification of land ownership, Honduras and Georgia are now using blockchain for their land registry records. Sweden is now looking to go this way. In case of Honduras blockchain could reduce corruption, eviction, violence and land grabs.
This technology can be used as a solution for a number of problems. It's time to start thinking about issues that you face and whether blockchain could be the tech to solve those problems. Take advantage of the global investment in blockchain!