Blockchain could replace banks and even lawyers

BLOCKCHAIN technology has seen an impressive surge in interest from consumers and businesses alike of late. At the start of 2018, the market capitalisation of bitcoin, which uses blockchain to operate, stood at around US$252 billion according to figures from coinmarketcap.com. It has since fallen to a little over US$182 billion as at Feb 28. In December 2017, Singapore-based blockchain startup FundPlaces raised a notable investment of S$2 million to disrupt the property investment sector.

Blockchain represents a foundational change in how financial records are kept and updated that could potentially remove middleman institutions; in fact, blockchains that transact with one another directly could replace central authorities such as banks, clearing houses and lawyers. How is this possible?

Akin to "universal bookkeeping", blockchain records propagate identical copies to all their users instead of having one single owner. Any participant in the ledger can trace all previous transactions, allowing increased transparency and making the blockchain "self-auditing" and transactions permanent. At the moment, the trustworthiness of a ledger comes from the central controller, such as banks. By distributing records among users, the trust is instead in the recordkeeping system itself, which means a greater degree of reliability.