Following the global financial crisis of 2008, a short, mysterious paper written by Satoshi Nakamoto outlined the world’s first real cryptocurrency, Bitcoin. The underlying technology behind Bitcoin is known as blockchain: a computer protocol enabling distributed ledgers and promising almost instantaneous and near free-value transactions. Blockchain allows money and assets to be moved without a central authority; validation is performed via a peer-to-peer network without the need for intermediaries to authenticate, clear or settle transactions. The second generation of blockchain utilises smart contracts which can automatise a series of blockchain-based actions and thereby have a disruptive impact, not only on payments but on the economy as a whole.
Key learning objectives:
What are the fundamental differences between blockchain and the current payment systems?
Outline the differences between centralised and decentralised blockchains
Define ‘smart contracts’ and explain how they can be used to evolve blockchain