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Blockchain Algorithm / October 12, 2016

Feel the love for blockchain technology, many of our readers have wondered how they can get in. Can a private, non-institutional investor somehow invest in the blockchain?" data-reactid="15">As big banks and other financial institutions continue to feel the love for blockchain technology, many of our readers have wondered how they can get in. Can a private, non-institutional investor somehow invest in the blockchain?

bitcoin blockchain and the broader, non-bitcoin idea of blockchain technology. Think of the bitcoin blockchain as a public ledger in the cloud, not unlike a library book slip (see the above video for more). It shows every transaction made with the digital currency bitcoin; the transactions are added in bundles called "blocks, " by "miners" who receive a small fee in bitcoin as incentive to add the data. (You can view that happening in-real time.) The bitcoin blockchain is public, open-source and permissionless." data-reactid="16">Answering the question requires a distinction between the itcoin blockchain and the broader, non-bitcoin idea of blockchain technology. Think of the bitcoin blockchain as a public ledger in the cloud, not unlike a library book slip (see the above video for more). It shows every transaction made with the digital currency bitcoin; the transactions are added in bundles called "blocks, " by "miners" who receive a small fee in bitcoin as incentive to add the data. (You can view that happening in-real time.) The bitcoin blockchain is public, open-source and permissionless.

sans bitcoin,  sans miners, to process their own transactions. The appeal is that it would make their systems faster and more efficient (most big banks are using old, outdated software for their record-keeping), as well as reduce friction and transfer delays. The bitcoin community is skeptical about the effort. "Having a closed, permissioned ledger run by banks might allow for better auditing, but there’s no innovation there, " says Jerry Brito, executive director of the nonprofit Coin Center, which has raised funding from the biggest names in bitcoin. "You still have to go through a consortium to use the ledger. data-reactid="17">What banks want to build is a private, closed blockchain, sans bitcoin, sans miners, to process their own transactions. The appeal is that it would make their systems faster and more efficient (most big banks are using old, outdated software for their record-keeping), as well as reduce friction and transfer delays. The bitcoin community is skeptical about the effort. "Having a closed, permissioned ledger run by banks might allow for better auditing, but there’s no innovation there, " says Jerry Brito, executive director of the nonprofit Coin Center, which has raised funding from the biggest names in bitcoin. "You still have to go through a consortium to use the ledger."

Indeed, 45 banks, including heavy-hitters like Citi, Credit Suisse, and JPMorgan, have jumped on board with a consortium, called R3, to test out blockchain technology. JPMorgan, eager to come out to an early lead in the blockchain race, announced last month it has been testing its own blockchain with 2, 200 customers." data-reactid="18">Indeed, 45 banks, including heavy-hitters like Citi, Credit Suisse, and JPMorgan, have jumped on board with a consortium, called R3, to test out blockchain technology. JPMorgan, eager to come out to an early lead in the blockchain race, announced last month it has been testing its own blockchain with 2, 200 customers.

The blockchain product itBit offers is called Bankchain. "Bitcoin is a public, anonymous use case of blockchain technology, " says itBit COO Andrew Chang. "Many financial institutions don't want to use the bitcoin blockchain because it’s an anonymous network and they're not okay with that. data-reactid="19">The blockchain product itBit offers is called Bankchain. "Bitcoin is a public, anonymous use case of blockchain technology, " says itBit COO Andrew Chang. "Many financial institutions don't want to use the bitcoin blockchain because it’s an anonymous network and they're not okay with that."

Whether the strategy will even bear fruit is unclear, but as Alex Kwiatkowski of financial software firm Misys says, "No one wants to be the one financial company that didn’t invest in blockchain.It feels like California in the Gold Rush - those making an early claim think they’ll get the most gold. But it’s just an efficiency improvement. There’s going to be some value there, they just need to unlock what it is without promising too much." " data-reactid="20">Whether the strategy will even bear fruit is unclear, but as Alex Kwiatkowski of financial software firm Misys says, "No one wants to be the one financial company that didn’t invest in blockchain.It feels like California in the Gold Rush - those making an early claim think they’ll get the most gold. But it’s just an efficiency improvement. There’s going to be some value there, they just need to unlock what it is without promising too much."

As banks and other big corporations continue to claim interest in blockchain, the idealogical divide between that side and the bitcoin side will only widen. Dan Conner, who is building a distributed ledger called DisLedger, aptly explains why: "If you’re a bitcoin fanboy and you’re a crypto-anarchist, that’s fine. But those people don’t tend to run in the same circles as banks." Conner predicts that even the term "blockchain" will go out of fashion for Wall Street the way "bitcoin" has, because there are inherent weaknesses in a blockchain. For now, clearly, the big banks are big believers in blockchain—or at least, they say they are.
" data-reactid="21">As banks and other big corporations continue to claim interest in blockchain, the idealogical divide between that side and the bitcoin side will only widen. Dan Conner, who is building a distributed ledger called DisLedger, aptly explains why: "If you’re a bitcoin fanboy and you’re a crypto-anarchist, that’s fine. But those people don’t tend to run in the same circles as banks." Conner predicts that even the term "blockchain" will go out of fashion for Wall Street the way "bitcoin" has, because there are inherent weaknesses in a blockchain. For now, clearly, the big banks are big believers in blockchain—or at least, they say they are.

If you, a regular investor (and Yahoo Finance reader), are also a believer, is there a way to invest in blockchain technology?
" data-reactid="22">If you, a regular investor (and Yahoo Finance reader), are also a believer, is there a way to invest in blockchain technology?

The short answer is: not directly. But there are three roundabout ways you could invest in the bitcoin blockchain or the broader, Wall Street concept of blockchain." data-reactid="23">The short answer is: not directly. But there are three roundabout ways you could invest in the bitcoin blockchain or the broader, Wall Street concept of blockchain.

If you believe in the strength of the bitcoin blockchain, the best way to invest is to buy bitcoin. Whether you want to do that for price-speculation purposes or simply out of curiosity to own a nascent asset class, there are myriad ways to obtain some easily, from exchanges like Coinbase, Circle, Bitstamp or Kraken, which has expanded in the U.S. recently through acquisitions. " data-reactid="24">If you believe in the strength of the bitcoin blockchain, the best way to invest is to buy bitcoin. Whether you want to do that for price-speculation purposes or simply out of curiosity to own a nascent asset class, there are myriad ways to obtain some easily, from exchanges like Coinbase, Circle, Bitstamp or Kraken, which has expanded in the U.S. recently through acquisitions.

Source: finance.yahoo.com
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