The Australian Securities Exchange is the first one in the world to start using blockchain technology.
Unless you have been living life offline, you no doubt have heard about Bitcoins crazy rise to crazy (stupid) heights – $16164 at the time of this blog writing.
Blockchain is used in Bitcoin, but they are not the same.
I was going to write a blog on Bitcoin and started to research it so I could lay it all out and the more I dug into it, the worse it got…. It is just riddled with questions and personal politics. The nail in that blog was finally hammered home very soundly when I read this post about its history on Reddit.
[If you follow that link up, keep in mind, it is not about how or why, but more who – My blog was to be about the how, since I am thebaldgeek, the tech was of interest, but when I read about how corrupt the tech was, I gave up].
Back to the ASX.
Blockchain is the underlying system that allows Bitcoin, Ethereum and other cryptocurrencies to be traded in a decentralized manner. It revolves around a ledger, or database, that is continuously updated and accessible to the public. Many users, or nodes, have a copy of the ledger and verify the transactions by completing difficult mathematical problems. In the Bitcoin world, these validators are called “miners.” They authenticate and group transactions into cryptographically protected “blocks” which are then added to the public “chain” for all to see. Miners are slowly rewarded with Bitcoin for carrying out this work, which requires a substantial PC rig.
Annnnndddd we will stop there. The point is, the math is sound. It is a way of mathematically proving who bought what, who sold what, who owns what.
So the underlying tech is good. And well done ASX for getting it off the ground, I am sure there are lots and lots of people in the world watching how it all goes and if it actually helps.
The problem is of course is that humans must run the computers that do the math and the network that ties the computers together, so, profit geek is about to openly state, some time down the track the ASX will be ‘hacked’ and this will all end in tears.
Bottom line, stay away from Bitcoin, but Blockchain should be Ok for a little bit more.
[Edit – a few minutes after posting this blog, this popped up in my RSS feed, its a good summary of what Bitcoin is not and roughly why – but note, it does not cover ANY of the subject matter outlined in that Reddit post]