A Quick Overview of Blockchain
First, however, let us briefly review what blockchain is, for those needing a refresher.

Where conventional financial transactions are facilitated by centralized financial institutions, a blockchain is a decentralized system in which encrypted transactions are entered into a ledger that is shared by multiple parties. A greatly simplified explanation of the how blockchain transactions work is as follows:

1. The transaction is encrypted and added to a distributed ledger.
2. Multiple parties with access to the shared ledger verify the details of the transaction, without compromising the identity of those involved.
3. Verified transactions are added as a permanent, irrevocable part of the shared ledger.
4. The transaction is completed.

Because only verified “blocks” of transactions can be added to the ledger, there is no need to re-examine the authenticity of any transaction once it has been verified and entered into the ledger.

Let us now look at how blockchain is impacting the banking industry.