{"id":63996,"date":"2018-01-02T00:00:30","date_gmt":"2018-01-02T00:00:30","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=63996"},"modified":"2025-04-15T10:00:28","modified_gmt":"2025-04-15T09:00:28","slug":"blockchain-guide","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/cryptocurrency\/blockchain-guide","title":{"rendered":"What is blockchain technology?"},"content":{"rendered":"<div id=\"ukfcyfixeddisclaimer\" class=\"visible no-margin-top\" data-template=\"masthead-two-columns\">\n<div id=\"ukfcyfixeddisclaimerbody\" class=\"text-center fin-text-white\" data-nosnippet><strong>Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. <u id=\"ukfcydscmdl\" onclick=\"ukfcyshowmodal();\">Take 2 mins to learn more<\/u>.<\/strong><\/div>\n<\/div>\n<style>\n@media (max-width: 767px) { .fixeddisclaimerbody { letter-spacing: -0.4px; } }\n@media (min-width: 1350px) { #page, #side-nav-container { padding-top: 24px !important; } .gn svg.w-\\[16px\\].h-\\[9px\\] { margin-top: 24px !important; } }\n@media (max-width: 1349px) and (min-width: 701px) { #page, #side-nav-container { padding-top: 48px !important; } .gn svg.w-\\[16px\\].h-\\[9px\\] { margin-top: 48px !important; } }\n@media (max-width: 700px) and (min-width: 481px) { #page, #side-nav-container { padding-top: 68px !important; } }\n@media (max-width: 480px) and (min-width: 381px) { #page, #side-nav-container { padding-top: 86px !important; } }\n@media (max-width: 380px) { #page, #side-nav-container { padding-top: 102px !important; } }\n#ukfcyfixeddisclaimer { top: 0; left: 0; position: fixed; right: 0; width: 100%; z-index: 40001; text-align: center; }\n#ukfcyfixeddisclaimerbody { line-height: 1.2; background-color: #6c7881; overflow: hidden; letter-spacing: -0.2px; padding: 4px 3px 5px 3px; }\n#ukfcymodal { z-index: 40002; }\n#ukfcymodalclosereal { z-index: 40003; position: fixed; left: 0; right: 0; top: 0; bottom: 0; }\n#modal-content { z-index: 40004; }\n.gn .nav-slideout--active { top: auto !important; }\n.gn .fixed { position: static !important; }\n#ukfcydscmdl { cursor: pointer; }\n<\/style>\n\n\n<div class=\"docsModal\">\n<section class=\"luna-modal\" aria-hidden=\"false\" role=\"dialog\" id=\"ukfcymodal\" aria-labelledby=\"modal-heading\" aria-describedby=\"modal-content\" tabindex=\"-1\">\n<div class=\"luna-modal__content\">\n<button id=\"ukfcymodalclose\" class=\"luna-modal__close\" type=\"button\" aria-label=\"Close modal\">\n<svg class=\"luna-icon\" aria-hidden=\"true\"><use xlink:href=\"#close\"><\/use><\/svg>\n<\/button>\n<div id=\"ukfcymodalclosereal\"><\/div>\n<div class=\"luna-modal__body\" id=\"modal-content\">\n<div class=\"luna-modal__wrapper\">\n\n<p><strong>Estimated reading time: 2 min<\/strong><\/p>\n\n<p>Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.<\/p>\n\n<h4 id=\"modal-heading\">What are the key risks?<\/h4>\n\n<p>1. You could lose all the money you invest<\/p>\n\n<ul> \n<li>The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.<\/li>\n<li>The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.<\/li>\n<\/ul>\n\n<p>2. You should not expect to be protected if something goes wrong<\/p>\n\n<ul>\n<li>The Financial Services Compensation Scheme (FSCS) doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime \u2013 in other words, this type of investment isn't recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS <a href=\"https:\/\/www.fscs.org.uk\/check\/investmentprotection-checker\">investment protection checker<\/a>.<\/li>\n<li>The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection <a href=\"https:\/\/www.financialombudsman.org.uk\/consumers\">here<\/a>.<\/li>\n<\/ul>\n\n<p>3. You may not be able to sell your investment when you want to<\/p>\n\n<ul>\n<li>There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.<\/li>\n<li>Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.<\/li>\n<\/ul>\n\n<p>4. Cryptoasset investments can be complex<\/p>\n\n<ul>\n<li>Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.<\/li>\n<li>You should do your own research before investing. If something sounds too good to be true, it probably is.<\/li>\n<\/ul>\n\n<p>5. Don't put all your eggs in one basket<\/p>\n\n<ul>\n<li>Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.<\/li>\n<li>A good rule of thumb is not to invest more than 10% of your money in high-risk investments.<\/li>\n<\/ul>\n\n<p>If you are interested in learning more about how to protect yourself, visit the FCA's website <a href=\"https:\/\/www.fca.org.uk\/investsmart\">here<\/a>.<\/p>\n\n<p>For further information about cryptoassets, visit the FCA's website <a href=\"https:\/\/www.fca.org.uk\/investsmart\/crypto-basics\">here<\/a>.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n\n\n<script>\nfunction ukfcyshowmodal() {\nvar infomodal = document.getElementById(\"ukfcymodal\");\ninfomodal.classList.add('is-visible');\ninfomodal.setAttribute(\"aria-hidden\", \"false\");\ndocument.getElementById(\"ukfcymodalclosereal\").addEventListener('click',function()\n{\nvar infomodal = document.getElementById(\"ukfcymodal\");\ninfomodal.classList.remove('is-visible');\ninfomodal.setAttribute(\"aria-hidden\", \"true\");\n});\n};\n<\/script><p>Blockchain is being heralded as a revolutionary new technology. But beyond its use in cryptocurrency, very few people understand what they can use it for or what industries it could change. This guide aims to demystify blockchain technology and explain what it is, what it&#8217;s used for, how it works and where its future might be.<\/p><section id=\"toc\" class=\"wp\"><h3 id=\"what-is\">What is blockchain?<\/h3><p>In essence, a blockchain is a database where you can add information, but not remove it. The data stored on a blockchain can be anything, including money (such as <a href=\"https:\/\/www.finder.com\/uk\/bitcoin\">Bitcoin<\/a>), insurance claims or even shares of physical property such as real estate. Instead of being stored on a single server, the database is spread out and stored on a vast network of computers known as nodes. This means that the system is distributed and that there is no central point of failure.<\/p><p>These nodes work together to add new information to the blockchain. This information is added in bundles known as blocks, and each time a new block of information is added, it is chained to the previous one in a linear fashion resulting in the blockchain.<\/p><div class=\"infogram-placeholder\" data-id=\"infogram_0_37248298-8045-4276-b167-e635810a3c08\" data-src=\"https:\/\/e.infogram.com\/js\/dist\/embed.js?iDu\"><\/div><p>Compare this to a traditional server set-up where a central server stores a copy of the information that you then access through external servers. Whoever controls the central server is in charge of adding information as well as changing or removing it. If the central server is damaged or hacked, the data is compromised. This is one of the problems that blockchain can solve.<\/p><div class=\"infogram-placeholder\" data-id=\"infogram_0_f8c5c26f-e472-4683-b8fe-265287213f3b\" data-src=\"https:\/\/e.infogram.com\/js\/dist\/embed.js?zQN\"><\/div><p>Because of the decentralised nature of a blockchain, it means that there is no one single entity with the power to change the state of the blockchain ledger and do things like shut down accounts or seize funds, unlike banks.<\/p><p>Another problem that blockchains solve is the issue of trust.<\/p><p>When parties make a transaction via the blockchain, they only need to place trust in the underlying infrastructure of the blockchain rather than in each other. Since a decentralised computer network can record and verify each transaction as well as make the transaction transparent, trust is created by default.<\/p><p>This means that a blockchain allows for &#8220;trustless&#8221; transactions. The transacting parties do not need to worry about trust because they give total trust to the network. In other words, using a blockchain means putting your trust in computers, rather than people who might have bad intentions or might simply make a mistake.<\/p><h3 id=\"how\">How does blockchain work?<\/h3><p>A blockchain works by keeping an unchangeable (immutable) record of transactions. It does this by reaching a consensus between all the computers, or nodes, on the network. Because blockchains consist of a distributed network of computers with no central authority, the majority of the nodes must agree to any addition to the blockchain (i.e. adding the next block). No one party can make any changes, which is what makes a blockchain a decentralised system. The more nodes that join the network, the more decentralised it becomes, which in turn improves security.<\/p><p>Consensus refers to the agreement between the nodes on the blockchain&#8217;s true state of affairs. If one node tries to lie, then its record of the blockchain won&#8217;t match that of the other nodes, and it will be automatically ignored. This system of consensus is fundamental to the security of the blockchain.<\/p><div class=\"infogram-placeholder\" data-id=\"infogram_0_f00348e2-7107-4e8c-a75f-c6172fbbeb90\" data-src=\"https:\/\/e.infogram.com\/js\/dist\/embed.js?drS\"><\/div><p>You control your personal data on a blockchain by using private keys. A private key is like a lengthy password that gives you access to a <a href=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/wallets\">digital wallet<\/a> where your personal data is stored. This data could be anything from money to details about your last medical check-up. The benefit of a private key is that it doesn&#8217;t have to be stored on a central server, unlike passwords for regular websites like Google or Facebook, which are <a href=\"https:\/\/www.wired.com\/story\/how-facebook-hackers-compromised-30-million-accounts\/\" target=\"_blank\" rel=\"noopener noreferrer\">prone to hacks<\/a>.<\/p><h3 id=\"solutions\">What problems does blockchain solve?<\/h3><p>On a trustless network like a blockchain, you can ask for payment from someone you have never met, and when the payment arrives, you can be sure that it is legitimate and verified, all within a matter of minutes. Existing systems such as the SWIFT banking network currently take two to three days to do this.<\/p><p>Another issue blockchains solve is the double-spend problem. The double-spend problem basically centres around the idea that on a database, someone can make an entry and then go back and change it if they have the power or authority to do so. This would essentially allow someone to spend the same money twice.<\/p><p>Blockchains solve this through a combination of factors that all prevent double spending:<\/p><ul class=\"list-7\"><li>Each transaction is time-stamped and kept in the correct order.<\/li><li>Every node must have a copy of the same ledger to reach consensus and to continue the blockchain.<\/li><li>Any node with a copy of the ledger that doesn&#8217;t match the majority of the other nodes will be ignored. That is, if someone tries to spend the same money twice by sending it to two different nodes, then only the node that matches the rest of the nodes on the network will be accepted in the next block of data.<\/li><\/ul><h3 id=\"what-else\">What else can a blockchain do?<\/h3><p>Blockchains belong to a group of technologies known as distributed ledger technologies (DLT). DLTs as we know them today have only been around for a decade or so, but are already receiving a lot of attention and development. Much like the Internet, additional protocols and technologies are being built on top of blockchains to further their abilities.<\/p><p>Let&#8217;s take a look at some of the most popular ones used today.<\/p><ul class=\"luna-accordionGroup accordionGroup\"><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000000\" data-toggle=\"collapse\" data-target=\"#accordion0000000000\">\n        <span class=\"luna-accordion__title\">Cryptocurrencies<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000000\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>No article discussing blockchain technology would be complete without mention of cryptocurrency. <a href=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/altcoins\">Cryptocurrencies<\/a> are digital &#8220;coins&#8221; that are native to their blockchain and can be used to reward node operators that help to secure the network and verify transactions.<\/p><p>Because blockchains require computing power to operate, cryptocurrencies were created as a way of rewarding network participants for their efforts. Cryptocurrencies also double as a store of value. The world&#8217;s first cryptocurrency, Bitcoin, was created in 2008 and has since spawned a revolution in digital assets and finance, with over 1,000 cryptocurrencies now existing today.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000001\" data-toggle=\"collapse\" data-target=\"#accordion0000000001\">\n        <span class=\"luna-accordion__title\">Tokens<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000001\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Much like their big brethren cryptocurrencies, tokens are also digital assets that are stored and traded on a blockchain. However, unlike cryptocurrencies, tokens are programmed &#8220;on top&#8221; of an existing blockchain, allowing them to piggyback the existing network infrastructure in the process. This means that tokens can be created easily, can be programmed for an even bigger variety of uses than their underlying cryptocurrencies, and can be used to represent almost anything, including gold, <a href=\"https:\/\/www.finder.com\/uk\/tether\">fiat currency<\/a> and even electricity usage.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000002\" data-toggle=\"collapse\" data-target=\"#accordion0000000002\">\n        <span class=\"luna-accordion__title\">Smart Contracts<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000002\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Pioneered by the <a href=\"https:\/\/www.finder.com\/uk\/ethereum\">Ethereum<\/a> blockchain, smart contracts are digital contracts that you can program to perform a specific set of functions. Like a physical contract, fulfilment of the contract requires that participants meet certain conditions, but unlike a physical contract, smart contracts can then execute the terms automatically once these conditions are met, such as paying out an insurance claim once you have paid the premium. Furthermore, smart contracts can do this without the need for middlemen, reducing cost while increasing speed and accuracy. According to financial services company, PwC, smart contracts <a href=\"https:\/\/www.digitalpulse.pwc.com.au\/infographic-smart-contracts\/\" target=\"_blank\" rel=\"noopener noreferrer\">may even eliminate the need for lawyers.<\/a><\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000003\" data-toggle=\"collapse\" data-target=\"#accordion0000000003\">\n        <span class=\"luna-accordion__title\">Digital Assets<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000003\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>If smart contracts were the second revolution of blockchain technology after cryptocurrencies, the digitisation of real-world assets on the blockchain could be the third. The ability to digitally render ownership of a real-world asset on a blockchain has huge implications for transparency, efficiency, ease-of-use and fundraising for traditional securities markets. Moving securities onto the blockchain via the use of security tokens has the potential to shake up legacy markets like the NASDAQ, NYSE and ASX in the same way cryptocurrencies shook up banking and finance.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000004\" data-toggle=\"collapse\" data-target=\"#accordion0000000004\">\n        <span class=\"luna-accordion__title\">The Internet of Things (IoT)<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000004\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Blockchain has a wide variety of uses within the emerging Internet of Things. For the uninitiated, the Internet of Things refers to the network of Internet-enabled devices, such as smartphones, TVs, cars, consumer appliances, etc. Blockchain is able to assist the way these devices communicate with each other, transact, stay secure and automate processes. For example, distributed ledger platform IOTA is working with several car manufacturers, such as Volkswagen, to <a href=\"https:\/\/www.iota.org\/verticals\/mobility-automotive\" target=\"_blank\" rel=\"noopener noreferrer\">integrate microtransactions<\/a>, which will allow electric vehicles to autonomously charge their batteries as well as pay for parking and tolls.<\/p><p>A <a href=\"https:\/\/www.pwc.com\/gx\/en\/industries\/financial-services\/publications\/blockchain-a-catalyst.html\" target=\"_blank\" rel=\"noopener noreferrer\">report by financial services firm PwC<\/a> notes that in regards to blockchain and IoT, &#8220;There is huge potential here: in 2015, there were already over 5 billion connected devices; this should rise to 20 billion by 2020.&#8221; Contrast this with another <a href=\"https:\/\/www.idc.com\/research\/viewtoc.jsp?containerId=US40755816\" target=\"_blank\" rel=\"noopener noreferrer\">report by corporate analysis firm IDC<\/a> which predicts that &#8220;By 2019&#8230;20% of all IoT deployments will have basic levels of blockchain services enabled&#8221; and you can see why blockchain, distributed ledger technologies and IoT are going to be a big deal.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000005\" data-toggle=\"collapse\" data-target=\"#accordion0000000005\">\n        <span class=\"luna-accordion__title\">Digital Identity<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000005\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Digital identities are nothing new, but blockchain promises to bring existing disparate systems together to <a href=\"https:\/\/www.finder.com.au\/the-future-of-privacy-is-on-the-blockchain-for-better-or-worse\">create a product that is greater than the sum of its parts<\/a>. Thanks to the efficiency and privacy of blockchains, governments and organisations could safely record an individual&#8217;s details on a blockchain, while giving ultimate control of that data to the end user.<\/p><p>Another advantage is that unlike physical documents, a distributed ledger is immutable and cannot be lost or easily destroyed. While each implementation of digital identities will no doubt vary, several existing uses of blockchain for digital identity demonstrate how it can be used. In Australia, NSW has already begun <a href=\"https:\/\/www.finder.com.au\/nsw-to-launch-digital-drivers-licence\">trials of a digital driver&#8217;s licence<\/a> stored on smartphones and secured by a blockchain. As the refugee crisis continues, <a href=\"https:\/\/www.finder.com.au\/blockchain-identity-as-a-human-right-and-the-refugee-crisis\">the World Food Program is using blockchain to manage food vouchers<\/a> and ensure aid is reaching those who truly need it. And industry heavyweight Microsoft began testing a <a href=\"https:\/\/www.finder.com.au\/microsoft-begins-work-on-a-blockchain-based-id-system\">decentralised blockchain ID system in 2018<\/a> for a broad range of applications.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000006\" data-toggle=\"collapse\" data-target=\"#accordion0000000006\">\n        <span class=\"luna-accordion__title\">Supply Chain Management<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000006\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Global supply chains are another industry that blockchain looks set to disrupt in a big way. Giants of industry such as Maersk, Amazon, Walmart and DHL are all exploring ways to improve their existing systems with blockchain technology. Blockchains have the ability to add a level of authenticity and trust to supply chains that is sorely missed by legacy systems. Startups such as <a href=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/coins\/how-to-buy-vechain\">VeChain<\/a>, WaltonChain and veteran companies like IBM are all applying blockchain in innovative ways to improve the supply chain industry.<\/p><\/div>\n  <\/div>\n<\/li><\/ul><section class=\"box box-blue\"><h3 id=\"public\">Public vs private blockchains<\/h3><p>Despite the world&#8217;s first distributed blockchain being a public affair, several companies have entered the space and found ways to commodify the technology, leading to the creation of permissioned private blockchains.<\/p><p>Private blockchains differ to public blockchains in that the nodes which operate and secure the network are privately chosen. This means that the network is effectively centralised, due to the ownership of nodes by a single entity or a consortium of private parties.<\/p><p>Blockchain purists argue that this goes against the fundamental purpose of a blockchain, which is to be decentralised. Because decentralisation is a cornerstone of blockchain security and integrity, the argument is that by centralising all the nodes there is almost no point in running a blockchain.<\/p><p>Private blockchains, of course, have a place; otherwise, people wouldn&#8217;t use them. Despite the concerns around centralisation, they are often faster and can process more transactions per second than public blockchains. Furthermore, the organisations using them may have less need for the benefits that a decentralised network confers.<\/p><p>For example, the privately operated Red Belly Blockchain can reach speeds of 30,000 transactions per second, whereas the highly popular public blockchain, <a href=\"https:\/\/www.finder.com\/uk\/ethereum\">Ethereum<\/a>, currently transacts <a href=\"https:\/\/etherscan.io\/chart\/blocktime\" target=\"_blank\" rel=\"noopener noreferrer\">at a speed of roughly 15<\/a> transactions per second, although improvements are planned.<\/p><p>Public blockchains are also, by their very nature, public. This means that anyone can see the transactions, anyone can join the network and anyone can see the code. Allowing the public to view everything helps ensure compliance, transparency, and security but can also lead exploitation. Furthermore, anyone can host a program on the network, which may cause the network to slow down if it becomes too popular.<\/p><p>So as you can see, public and private blockchains each come with their own set of strengths and weaknesses, which again differs depending on the particular blockchain at hand. Therefore companies, developers and users must choose which system they would prefer to run, depending on the task at hand.<\/p><\/section><h3 id=\"who\">Who uses blockchains?<\/h3><p>Anyone can create a blockchain, although certain blockchains are more popular than others. Bitcoin was the first public blockchain created, and it was designed for the transfer of wealth without a trusted third party. Since then, many different developers, companies and hobbyists have created their own blockchains for all sorts of purposes.<\/p><p>Enterprises are now using those blockchains (both public and private) to <a href=\"https:\/\/www.forbes.com\/sites\/oliviergarret\/2017\/03\/29\/5-industries-that-blockchain-will-likely-disrupt-by-2020\/#7b618b236692\" target=\"_blank\" rel=\"noopener noreferrer\">improve the way they do business<\/a>, often cutting out the need for <a href=\"https:\/\/www.marketwatch.com\/story\/blockchain-will-make-todays-accountants-and-many-wall-street-jobs-obsolete-2018-02-28\" target=\"_blank\" rel=\"noopener noreferrer\">previously required roles<\/a>, <a href=\"https:\/\/www.finder.com\/uk\/ripple\">speeding things up<\/a> and making business cheaper.<\/p><p>Let&#8217;s take a look at some of the biggest companies using or exploring blockchain technology this year.<\/p><ul class=\"list-9\"><li><b>IBM:<\/b> IBM has quickly taken the lead in developing blockchain solutions for private enterprises and the news about partners keeps growing. So far clients banks, logistics firms, international money transfer groups and insurance providers.<\/li><li><b>American Express:<\/b> Payments provider American Express is tapping into blockchain to <a href=\"https:\/\/www.coindesk.com\/american-express-upgrades-rewards-program-hyperledger-blockchain\/\" target=\"_blank\" rel=\"noopener noreferrer\">improve their customer rewards experience<\/a>. The company uses the <a href=\"https:\/\/www.hyperledger.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">Hyperledger<\/a> platform to enable merchants to create their own customised Membership Rewards programs for American Express users.<\/li><li><b>Ford Motors:<\/b> Car manufacturer Ford has patented a blockchain system which uses cryptocurrency to allow vehicles to communicate and transact with each other. Ford imagines the technology could be used to allow driverless vehicles to coordinate traffic and even let cars purchase &#8220;fast lanes&#8221;.<\/li><li><b>Bank of America:<\/b> Bank of America thinks blockchain is going to be the next big industry, <a href=\"https:\/\/www.cnbc.com\/2018\/10\/02\/blockchain-could-be-a-major-boost-to-amazon-microsoft-analyst-says--.html\" target=\"_blank\" rel=\"noopener noreferrer\">predicting<\/a> that the technology will become a billion dollar market. They&#8217;ve invested on that prediction too, filing nearly 50 patents already, <a href=\"http:\/\/fortune.com\/2018\/06\/20\/bank-of-america-blockchain-patent-why\/\" target=\"_blank\" rel=\"noopener noreferrer\">according to CTO Catherine Bessant<\/a>.<\/li><li><b>Microsoft:<\/b> Microsoft offers blockchain services such as Corda, Hyperledger and Ethereum through their cloud computing system Azure. While Microsoft offers blockchain services to a long list of third-party clients, they have also put their money where their mouth is. Microsoft&#8217;s video game platform \u2013 Xbox \u2013 uses blockchain to settle publisher royalties almost instantly, replacing their previous system, <a href=\"https:\/\/customers.microsoft.com\/en-au\/story\/microsoft-financial-operations-professional-services-azure\" target=\"_blank\" rel=\"noopener noreferrer\">which typically took 45 days to settle<\/a>.<\/li><\/ul><h3 id=\"issues\">Issues with blockchain<\/h3><p>Identifying issues with blockchain technology really depends on where you sit and the particular blockchain. Critiques often revolve around speed, issues of centralisation (or decentralisation), adoption, complexity privacy. Some of these issues have fairly simple solutions, such as choosing a private blockchain to increase privacy or creating a new interface to improve usability.<\/p><p>However, the one major issue that several of these smaller issues contribute to is the issue of scalability.<\/p><p>Scalability refers to the ability (or lack thereof) for blockchains to scale as more users join the network. As more users join, speed and size (bandwidth) needs to increase in order to process all the new data being added. Currently, blockchains struggle to do this without making a trade off in other areas, namely decentralisation and security.<\/p><p>This three-way trade-off among scalability, decentralisation and security has become known as the Blockchain Trilemma.<\/p><div class=\"did-you-know u-bg--sky-subtle u-rounded--lg\" data-component=\"did-you-know\">\n        <div class=\"did-you-know__block\">\n        <h4 class=\"did-you-know__title\">\n            <span class=\"did-you-know__title-icon\">\n                <svg width=\"32\" height=\"32\" viewbox=\"0 0 32 32\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n                    <circle cx=\"16\" cy=\"16\" r=\"12\" fill=\"#00B2FF\"\/>\n                    <path d=\"M17.5 22.5C17.5 22.7967 17.412 23.0867 17.2472 23.3334C17.0824 23.58 16.8481 23.7723 16.574 23.8858C16.2999 23.9993 15.9983 24.0291 15.7074 23.9712C15.4164 23.9133 15.1491 23.7704 14.9393 23.5607C14.7296 23.3509 14.5867 23.0836 14.5288 22.7926C14.471 22.5017 14.5007 22.2001 14.6142 21.926C14.7277 21.6519 14.92 21.4176 15.1667 21.2528C15.4133 21.088 15.7033 21 16 21C16.3978 21 16.7794 21.158 17.0607 21.4393C17.342 21.7206 17.5 22.1022 17.5 22.5ZM16 9C13.2425 9 11 11.0188 11 13.5V14C11 14.2652 11.1054 14.5196 11.2929 14.7071C11.4804 14.8946 11.7348 15 12 15C12.2652 15 12.5196 14.8946 12.7071 14.7071C12.8946 14.5196 13 14.2652 13 14V13.5C13 12.125 14.3463 11 16 11C17.6538 11 19 12.125 19 13.5C19 14.875 17.6538 16 16 16C15.7348 16 15.4804 16.1054 15.2929 16.2929C15.1054 16.4804 15 16.7348 15 17V18C15 18.2652 15.1054 18.5196 15.2929 18.7071C15.4804 18.8946 15.7348 19 16 19C16.2652 19 16.5196 18.8946 16.7071 18.7071C16.8946 18.5196 17 18.2652 17 18V17.91C19.28 17.4913 21 15.6725 21 13.5C21 11.0188 18.7575 9 16 9ZM29 16C29 18.5712 28.2376 21.0846 26.8091 23.2224C25.3807 25.3603 23.3503 27.0265 20.9749 28.0104C18.5995 28.9944 15.9856 29.2518 13.4638 28.7502C10.9421 28.2486 8.6257 27.0105 6.80762 25.1924C4.98953 23.3743 3.75141 21.0579 3.2498 18.5362C2.74819 16.0144 3.00563 13.4006 3.98957 11.0251C4.97351 8.64968 6.63975 6.61935 8.77759 5.1909C10.9154 3.76244 13.4288 3 16 3C19.4467 3.00364 22.7512 4.37445 25.1884 6.81163C27.6256 9.24882 28.9964 12.5533 29 16ZM27 16C27 13.8244 26.3549 11.6977 25.1462 9.88873C23.9375 8.07979 22.2195 6.66989 20.2095 5.83733C18.1995 5.00476 15.9878 4.78692 13.854 5.21136C11.7202 5.6358 9.76021 6.68345 8.22183 8.22183C6.68345 9.7602 5.63581 11.7202 5.21137 13.854C4.78693 15.9878 5.00477 18.1995 5.83733 20.2095C6.66989 22.2195 8.07979 23.9375 9.88873 25.1462C11.6977 26.3549 13.8244 27 16 27C18.9164 26.9967 21.7123 25.8367 23.7745 23.7745C25.8367 21.7123 26.9967 18.9164 27 16Z\" fill=\"#232320\"\/>\n                <\/svg>\n            <\/span>\n            <span class=\"did-you-know__title-text\">The Blockchain Trilemma<\/span>\n        <\/h4>\n        <div class=\"did-you-know__content\">\n            <p>The Blockchain Trilemma refers to the existing problem in blockchains where any improvement to scaling, decentralisation or security cannot be made without a detrimental impact on at least one of the other two. Many blockchains have tried to solve the trilemma, only to improve in one area but lose out in another.<\/p><p>This is currently one of the biggest issues with blockchain technology, and cited by many as the reason why blockchains have not replaced existing systems like Visa and SWIFT for payments.<\/p>\n        <\/div>\n    <\/div>\n<\/div>\n<h3 id=\"faqs\">Frequently asked questions<\/h3><ul class=\"luna-accordionGroup accordionGroup\"> <li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000007\" data-toggle=\"collapse\" data-target=\"#accordion0000000007\">\n        <span class=\"luna-accordion__title\">Is blockchain decentralised or distributed?<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000007\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Decentralisation and distributed are actually two different features, but both are important to blockchain security.<\/p><p>Decentralisation refers to there being no central authority that can make changes to the blockchain.<\/p><p>Decentralisation is never a guarantee, but rather something that public blockchains work to ensure. Private blockchains on the other hand may actually choose to be centralised because it suits their needs.<\/p><p>Distributed systems refer to the fact that instead of data being stored on a central server, the data is stored across multiple servers, or nodes. All blockchains are distributed, which means there is no central point of failure if the network were ever attacked or physically damaged.<\/p><\/div>\n  <\/div>\n<\/li><li class=\"luna-accordion\" data-accordion=\"accordion\">\n  <div class=\"luna-accordion__summary\">\n    <h4 class=\"luna-accordion__heading\">\n      <button class=\"luna-accordion__action collapsed\" aria-expanded=\"false\" aria-controls=\"accordion0000000008\" data-toggle=\"collapse\" data-target=\"#accordion0000000008\">\n        <span class=\"luna-accordion__title\">How to invest in blockchain?<\/span>\n        <svg class=\"luna-icon\" aria-hidden=\"true\">\n          <use xlink:href=\"#chevron-down\" data-accordion-icon=\"show\"><\/use>\n          <use xlink:href=\"#chevron-up\" data-accordion-icon=\"hide\" class=\"is-hidden\"><\/use>\n        <\/svg>\n      <\/button>\n    <\/h4>\n  <\/div>\n  <div class=\"luna-accordion__details collapse\" aria-hidden=\"true\" id=\"accordion0000000008\" data-accordion=\"details\">\n    <div class=\"accordionContent\"><p>Since blockchain is a type of technology, you can&#8217;t invest in &#8220;it&#8221; per se; however, you can invest in companies or organisations that use it. Cryptocurrencies are a popular form of blockchain investment since they allow people to purchase the currency or token that powers a particular blockchain or uses the blockchain.<\/p><p>Another way to invest in blockchain is by choosing companies that are developing blockchain technologies and purchasing stock in those companies.<\/p><\/div>\n  <\/div>\n<\/li><\/ul><section class=\"feed\">\n            <header>\n            <h3 class=\"contentFeed__title contentFeed__title--small\">Latest blockchain news<\/h3>\n        <\/header>\n        <ul class=\"luna-list luna-list--divider\">\n                    <li>\n                <a class=\"luna-list__item\" href=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/defi\">What is DeFi?<\/a>\n                <p class=\"feed-paragraph\">\n                                            <span class=\"feed__date\">21 Jun 2022<\/span>\n                        <span class=\"feed__separator\">|<\/span>\n                        <span class=\"feed__author\">Andrew Munro<\/span>\n                                    <\/p>\n            <\/li>\n                    <li>\n                <a class=\"luna-list__item\" href=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/cryptocurrency-glossary\">Crypto A to Z: Cryptocurrency glossary<\/a>\n                <p class=\"feed-paragraph\">\n                                            <span class=\"feed__date\">16 Apr 2021<\/span>\n                        <span class=\"feed__separator\">|<\/span>\n                        <span class=\"feed__author\">Chris Stead<\/span>\n                                    <\/p>\n            <\/li>\n            <\/ul>\n<\/section>\n\n\n\n<div class=\"newsletter\">\n    <form method=\"post\" action-xhr=\"\/wp-json\/notification-service-proxy\/v1\/track\" class=\"form-signup js-ns-newsletter\" data-form=\"OnPageEmbed\" data-niche=\"FCY-CAMPAIGN-CRYPTOCURRENCY\" data-page-niche=\"GXFCY\" data-form-type=\"newsletter\">\n<input type=\"hidden\" name=\"eventName\" value=\"newsletterSubscribed\" \/>\n<input type=\"hidden\" name=\"payload[submitNiche]\" value=\"FCY-CAMPAIGN-CRYPTOCURRENCY\" \/>\n<input type=\"hidden\" name=\"payload[submitUrl]\" value=\"https:\/\/www.finder.com\/uk\/cryptocurrency\/blockchain-guide\" \/>\n<input type=\"hidden\" name=\"payload[submitForm]\" value=\"OnPageEmbed\" \/>\n<input type=\"hidden\" name=\"payload[submitDomainCountry]\" value=\"AU\" \/>\n        <div class=\"form-signup__group\">\n                            <label class=\"luna-label\" for=\"ns-newsletter\">Get the crypto newsletter read by 6,000+ investors \ud83d\ude80<\/label>\n                        <div class=\"form-signup__field\">\n                <div class=\"luna-inset luna-inset--left js-email\">\n                    <input name=\"email\" class=\"luna-input\" type=\"text\" aria-describedby=\"ns-subscription-privacy-generic\" placeholder=\"Enter your email address\" id=\"ns-newsletter-generic\" required \/>\n                    <span class=\"luna-icon\"><\/span>\n                <\/div>\n<small class=\"disclaimer-text\" id=\"ns-subscription-privacy-generic\">\n    <input class=\"luna-checkbox\" type=\"checkbox\" id=\"checkbox-privacy-policy-generic\" required \/>\n    <label class=\"luna-label\" for=\"checkbox-privacy-policy-generic\">\n    <small>\n        I agree to the <a target=\"_blank\" rel=\"nofollow noopener noreferrer\" href=\"\/uk\/privacy-policy\">Privacy and Cookies Policy<\/a>, <a target=\"_blank\" rel=\"nofollow noopener noreferrer\" href=\"\/uk\/terms-of-use\">finder.com Terms of Use<\/a> and to receive emails from Finder \n    <\/small>\n    <\/label>\n<\/small>\n                <button type=\"submit\" class=\"luna-button luna-button--action relative has-overflow-hidden\" id=\"newsletterCTA\">\n                    <span class=\"btn__content\">Join for free<\/span>\n                    <span class=\"btn__success icon-tick\"><\/span>\n                <\/button>\n            <\/div>\n        <\/div>\n<div submit-success>\n    <template type=\"amp-mustache\">\n      Success! 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.disclaimer-text{-webkit-box-flex:1;-webkit-flex:1 0 100%;-ms-flex:1 0 100%;flex:1 0 100%;text-align:center}.newsletter--gaming{padding:0 1.75rem 1rem}.newsletter .luna-input,.newsletter--countdown .luna-input{-webkit-box-sizing:border-box;box-sizing:border-box}.newsletter .luna-icon,.newsletter--countdown .luna-icon{margin-top:.6875rem!important;margin-left:.6875rem}.newsletter .is-invalid .luna-checkbox+.luna-label:before,.newsletter .is-invalid .luna-input,.newsletter--countdown .is-invalid .luna-checkbox+.luna-label:before,.newsletter--countdown .is-invalid .luna-input{border-color:#cf2317}.newsletter--countdown .luna-form__feedback{color:#cf2317}.newsletter--countdown .offset-card__body{background-color:#b9defe}\n<\/style><\/section><p><small>Picture: Shutterstock<\/small><\/p><p><i>Disclosure: At the time of writing, the author holds BTC, XRP, BNB, ETH, XLM, PWR, VET, ICX, WAN, ETC, LRC, QASH, XMR, NEO, NXS, THETA and BAT.<\/i><\/p><article class=\"luna-card luna-card--alt\"><div class=\"luna-card__block has-padding-small\"><p class=\"has-margin-bottom-xsmall\">*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.<\/p><p>Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.<\/p><\/div><\/article>","protected":false},"excerpt":{"rendered":"<p>Discover blockchain: what it is, how it works and who is exploring it in the UK.<\/p>\n","protected":false},"author":195,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"apple_news_api_created_at":"","apple_news_api_id":"","apple_news_api_modified_at":"","apple_news_api_revision":"","apple_news_api_share_url":"","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[2153],"tags":[],"asset_tag":[],"class_list":["post-63996","post","type-post","status-publish","format-standard","hentry","category-cryptocurrency"],"apple_news_notices":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.9 (Yoast SEO v24.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is blockchain technology? 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