With its dynamic socioeconomic landscape, solid interconnectivity, massive digitization of payment solutions and consistent regulatory environment, Asia is poised to become a hotbed for blockchain innovation. Financial services organizations in the region see blockchain as a game-changer, according to our recent research, and are working hard to develop strategies, increase collaborative efforts and address security and latency concerns.
A Blockchain Primer
Blockchain is a decentralized software mechanism that enables a public distributed ledger system. The technology allows the tracking and recording of assets and transactions without the presence of a central trust authority such as a bank. Blockchain networks create proof of ownership by using unique digital signatures that rely on public encryption keys known to everyone on the network and private keys known only to the owner. Complex algorithms drive consensus among users, ensuring that transaction data cannot be tampered with after verification, reducing the risk of fraud. These networks also enable peer-to-peer exchange of data, assets and currencies through rules-based smart contracts in a more efficient, transparent and cost-effective manner. Once created, smart contracts execute automatically once their terms are met, without the need for human intervention. Smart contracts are not unique to blockchain, but they are greatly enhanced by blockchain networks. Blockchain platforms can be public (i.e., permissionless) like Bitcoin, with anyone allowed to submit a transaction and take part in validating other transactions. They can also be private (i.e., permissioned), where only authorized parties participate in sharing and validating information.
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