What is Blockchain?

Bitcoin uses a distributed peer-to-peer network to authenticate and record all transactions in the order they occurred. A decentralised record of transaction

Jim Sinegal 4 June, 2018 | 7:41AM
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bitcoin blockchain blockchain has the potential to disrupt economic activities ranging from simple payments to the structure of a corporation as it currently exists

Blockchain is full of promise. Billions of dollars have been invested into the space. Large corporations, venture capital funds, and initial coin offerings are funding projects. The activity is not completely misguided; blockchain has the potential to disrupt economic activities ranging from simple payments to the structure of a corporation as it currently exists.

Traditionally, some of the strongest competitive advantages have come from centralisation. Network effects, for example, can lead to huge profits for companies that centralise and control transaction activity--for example, payment networks, marketplaces, social networks, and futures exchanges. Similarly, centralisation can create competitive advantages via economies of scale, as fixed costs are spread over a large number of transactions.

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Jim Sinegal  Jim Sinegal is the associate director of the financial team at Morningstar.

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