Defining blockchain

The blockchain is a basic protocol. A protocol is a technical term referring to a standard language created to enable a large number of people to write entries into a record of information. A community of users is all allowed to control how the record of information is changed and updated without an individual owner to control information.

For instance, the protocol for exchanging data on the Web is the HyperText Transfer Protocol or HTTP, while the email protocol is the Simple Mail Transfer Protocol or SMTP. A browser’s protocol for transferring data with a high level of security is called Secure Sockets Layer or SSL, which we see as the small green padlock icon in the browser when a payment is made with a credit card.

The blockchain is a crucial protocol for the financial world because it allows a record of changing information on the Internet, sending and receiving from the different value to become the same language with everybody in the community acknowledging the changes of data or transaction updated.

Furthermore, it is considered the first protocol that reshapes the global financial landscape by enabling everybody in the world to access basic financial systems through the open-source software openly.

The Internet has evolved over the last 40 years. The basic Internet or first layer was the Internet of Information, which was the sending and receiving of information in the form of copies, whether spreadsheets, PowerPoint presentations, Word documents or email. In transferring money online, the money cannot transfer directly from sender to receiver but it needs to be done by an intermediary, which could be a bank, a credit card company, PayPal or Western Union. This sends the value on, requiring the participation of a third party.

In transferring money online, such as sending 100 baht to an individual or a business online, the sender does not have a copy of the 100 baht on their device after they have sent the money. The way to solve this problem is to have a trusted intermediary with the power to inspect the correctness of various individuals making transactions.

However, the way intermediaries work also has many limitations and costly. Therefore, the blockchain is a second layer in the evolution of the Internet to overcome these limitations, so that the originator and the receiver can exchange value peer-to-peer for the first time in human history. The blockchain is a phenomenon resulted in a financial world that has changed forever.

Reference: Forbes Thailand and www.NBTC.go.th