Originally the formal name of the tracking database underlying the digital currency bitcoin, the term is now used broadly to refer to any distributed electronic ledger that uses software algorithms to record transactions with reliability and anonymity. This technology is also sometimes referred to as distributed ledger (its more generic name), cryptocurrencies (the electronic cryptocurrencies), and decentralized verification (the key differentiating attribute of this type of system).
At the heart, blockchain is a self-sustaining, peer-to-peer database technology for managing and recording transactions with no central bank or clearinghouse involvement. Because blockchain verification is handled through algorithms and consensus among multiple computers, the system is presumed immune to tampering, fraud, or political control. It is designed to protect against domination of the network by any single computer or group of computers. Participants are relatively anonymous, identified only by pseudonyms, and every transaction can be relied upon. Moreover, because every core transaction is processed just once, in one shared electronic ledger, blockchain reduces the redundancy and delay.
Blockchain technology could become a game-changer force in any venue where trading occurs, where trust is at premium, and where people need protection from identity theft – including public sector, healthcare, retail, and, of course, all forms of financial services.