Every now and then there comes a technology that changes the shape of a particular sector or causes disruption in that sector. Apps/services like Uber and Airbnb have changed the game in transportation and hospitality sectors. WhatsApp made a great dent to the world of SMS (Short Messaging Services). People embrace new technology especially more so when the technology provides better services at better price, brings in easy access and ways to serve their needs. Companies like Netflix have turned from just being streaming service providers to producing their original content and are raising the bar very high for other media outlets. We haven’t seen things moving in the financial sector let alone the disruption which is long due. Though bitcoins have managed to a certain amount of interest and have shown glimpses of causing disruptions in the financial industry, it soon waded off. Now “blockchain” is being touted as the next big thing for the financial sector.

BlockChain Vs BitCoins?

Bitcoin is a digital asset and payment system invented in 2008. Bitcoin is a peer-to-peer network and the transactions are directly between the users. It doesn’t need the usage of an intermediary for transactions. Such transactions are recorded in a public ledger called blockchain and are verified by the network nodes.

block chain or blockchain is a distributed database that maintains a continuously-growing list of data records hardened against tampering and revision. It consists of data structure blocks—which hold exclusively data in initial blockchain implementations, and both data and programs in some of the more recent implementations—with each block holding batches of individual transactions and the results of any blockchain executables. Each block contains a timestamp and information linking it to a previous block.

While using bitcoins, users are allowed to connect to the network, send new transactions, and verify the transactions and to create new blocks. A Block in this context is an implementation of block chain that records and confirms the order and time in which the transactions are entered and logged in to the block chain, these blocks are created by users known as “miners” with the help of software and tools specially designed to create blocks.

Blockchain is being termed as the technical innovation of bitcoin.

While the number of merchants accepting bitcoins for their products or services is growing at a very good pace, there is not much adoption in retail transactions.

Why Bitcoins didn’t it work last time?

One of the biggest disadvantage of bitcoins is that the ownership of bitcoins of a user is tied to a specific address. Bitcoins need that the owner while paying for a product or service sign the transaction digitally using their private key. In case the private key is lost, the bitcoins are rendered useless and there’s no way the user can spend their bitcoins.

Also since there’s no room to identify the ownership of bitcoins as they are virtual or digital currencies and not physical in nature, it is very tough to identify if they are being used for unlawful purposes. There are occasions where various governments have mentioned that bitcoins are being used by anti-social elements to make payments. This led to scepticism among users and merchants alike and there were concerns that the governments might order for a crack-down which led to bitcoins not finding too much traction in mainstream.

The rise of BitCoins, yet again?

One of the reasons that bitcoins may finally find some main stream adoption is the fact that blockchain has gained traction and that few governments, some major banks and technology giants like Microsoft, IBM etc. backing a private blockchain that could help them track all transactions.

Blockchains have the potential to reduce the cost and complexity of getting things done, provide the ability to track and trade anything. Business processes can be streamlined while increasing the trust, transparency and accountability.

The other reason for bitcoins to make a comeback is that one of the advantages of blockchain is it being hardened against tampering and revision. It is nigh impossible and prohibitively expensive to rewrite or modify the transaction history when using bitcoins and blockchain. Each party involved in a bitcoin/blockchain transaction stores a copy of the transaction and the other fact being that the new transaction holds a reference to the earlier ones hence making it to be considered more secure.

Block chain also comes with automated conflict resolution, where in it ensures that there are no conflicting transactions such as the cryptocurrency/digital currency belonging to the same balance cannot be used more than once and that they never form a part of the final data set. Bloch chain also provides consistency in its data set.

There are many alternative block chains and sidechains in place such as Ethereum, Mastercoin, swarm, liquid, Openchain.

Is Blockchain a product / offering/ framework/standard?

Blockchain can be considered as a product or as an offering. Though standards are not defined when it comes to how the implementation should be, there are standards in terms of the currency values being used. FIs/Enterprises/Businesses can implement their own versions of block chains called as alternative block chains, they are also based on bitcoin technology.

Certain organizations provide blockchain as an offering. For example, Ethereum Blockchain as a Service (EBaaS) running on Microsoft Azure provides enterprise clients and their developers with a cloud-based blockchain developer environment.


The Players

There are organizations like Ethereum that provide this as a service offering. Organizations like Microsoft have tied-up with corporate banks to implement a system similar to blockchain exclusively for those banks. Other players include Mastercoin, Swarm provide Alternative Block Chains. One of Big 4, Deloitte is also working with one of its clients to create a digital bank.

A consortium of 11 banks is making use of a private blockchain powered by Ethereum running on Microsoft Azure under the name “Project R3”.

IBM’s ADEPT, an IoT system makes use of Ethereum as well for smart contacts support.

Microsoft is working on integrating Ethereum Solidity language with its Visual Studio so that developers can take advantage of it.

Hyperledger is an open source collaborative effort by many organizations working towards advancing the block chain technology, creating cross-industry open standards for distributed ledgers.

Recently Infosys – EdgeVerve, one of the Indian heavyweights in the IT sector has launched Blockchain framework for its financial services.

Typical Use Cases of Blockchain

Whenever there’s a system of currencies being traded or items being traded for money becomes a use case for the implementation of blockchain. Users can send or share bitcoins instead of the actual money through intermediaries such as banks. Payments can be made through bit coins rather than actual/plastic money.



Though financial sector has been able to keep pace with the trends and requirements of people, security is still  the most important and crucial feature. Most of the organizations have employed the state of the art technical developments, however unauthorized people have managed to gain access to the system. Blockchain looks promising and has the potential to provide the necessary impetus to financial sector (and hopefully disrupt) especially in addressing the security concerns. Let’s hope that this technology can be a game changer .