Blockchain is the internet technology developed by the inventors of Bitcoin to help make financial transactions nearly impossible to hack. Blockchain distributes transactions over a peer-to-peer network which provides authentication for the exchange. Once the peer-to-peer network has validated the transaction, it combines with others in a digital ledger to create a new block. The transaction completes when the block becomes a link in the "blockchain."
Due to its distributed nature, the "blockchain" is extremely secure. There is no central location to attack as the data in the ledger is effectively spread across the network. To change the ledger would mean a network-wide breach that is nearly impossible to execute. That same network-wide distribution also creates transparency that is beneficial to the end users.
Beyond Bitcoin, there are other businesses interested in using Blockchain technology, especially as a means for making payments, and its popularity is rising. Blockchain's increase in popularity is to the point that some Universities are teaching development courses. Recently, a paper published at the World Economic Forum described Blockchain as having the potential to “lead to a generational shift in the Internet’s evolution, from an Internet of Information to a new generation Internet of Value.” Its growing clout in the payment industry is obvious. The auditing and tax company Deloitte recently announced plans to use Blockchain and there is a forum in the United States this summer to discuss its impact and potential regulation.
The appeal and use of Blockchain is clear. The ability to conduct financial transactions via a distributed ledger keeps the deal honest, open, and transparent for both sides. However, this lack of centralization has spooked some in a heavily regulated industry. Blockchain technology is difficult to regulate in the same way as banks. There are no clear rules or standards and few developers. The lack of standardization and developers further complicates any attempts to control it.
Will Blockchain be the future of the transparent business transactions? The answer is not a definitive yes. There are some problems to work through. That major companies, universities and even governments are beginning to use the technology does give it credence and makes it hard to ignore. It has come far since its use with Bitcoin and there is no reason to think that it will not go farther.