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'Shared economy’ or ‘collaborative economy’ are the terms often used to describe economic and social activity involving online transactions. So if you’ve caught a ride from Uber or stayed in an AirBnB rental, then you’ve been part of the shared economy – you’re transacting with another individual or company using the platform provided by Uber and AirBnB. Blockchain takes this concept a bit further. By allowing individuals to connect, share and transact directly, it enables real peer-to-peer transactions and a true ‘sharing economy.’
The Blockchain network consists of multiple nodes, and in most implementations, all nodes have a copy of the whole Blockchain, and so the network has no single point of failure. The content of a block cannot be altered once it has been signed (immutability). In addition, it eliminates the need for third-party validators such as contract executors, payment processors and brokers.
By providing trust in a network without a central authority, Blockchain makes any activity – however small – easy to monetize, and is therefore expected to create new markets where individuals can trade non-traditional assets like reputation, data and attention.
Some companies are now offering private solutions, such as Ripple for financial settlements and Guardtime for data integrity. The Hyperledger project, led by Linux and including IBM and JP Morgan, is attempting to build a cross-industry open standard.
Currently, banking is the sector taking Blockchain ecosystems more seriously than any other sector. In 2015, financial innovation firm, R3, established a consortium partnership with the world’s leading banks (including Barclays) to provide distributed ledger technologies to economies worldwide, with more than 70 financial institutions now participating.
The consortium's joint efforts have created an open-source distributed ledger platform called Corda. Corda, which was open-sourced on 30 November 2016, is specially geared towards the financial world as it handles more complex transactions and restricts access to transaction data.
The benefits of a distributed ledger ecosystem extend beyond the financial sector. For instance, in the public sector, a secure, distributed ledger can provide more openness and transparency, and transform services and processes including licensing, personal identification, voting records, utilities, benefits management, and more. Many other industries such as retail and manufacturing can benefit from better supply chain management, smart contract platforms and digital currencies, and tighter cybersecurity.
It is worth noting, however, that with the technicalities involved, new technology, start-up developers, incumbent providers, main markets of usage, clients of main market users and, finally, customer of clients, it may take at least a decade before it becomes mainstream… watch this space.
George Osborne, Innovation Director at Barclays
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