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For the fintech industry—for all financial institutions—trust in transactions is essential. To increase trust in online transactions, software technology known as blockchain creates a higher level of accounting transparency than in standard transactions, where all parties aren’t privy to the accounting ledger. 

There are many forms of blockchain, but they generally operate the same way, by creating digital signatures of each transaction and sharing them among a network of computers. Each computer can use the signatures to continuously verify who owes what to whom.

By keeping a public, up-to-the-moment ledger, blockchain allows any computer on the network to monitor integrity of a particular asset or transaction, thereby deterring fraud. This distributed form of electronic bookkeeping is useful beyond finance. “Where I’ve seen the most exciting fintech innovation is in the blockchain space,” said Dan Roberts, ’10, managing director and head of capital and liquidity management at London-based Barclays. Blockchain is the bedrock of Bitcoin, the first widely known virtual currency. Instead of relying on physical tender, Bitcoin issues a restricted number of digital units called bitcoins. 

Blockchain is still experimental and can be expensive to implement. And it’s not infallible, as high-profile electronic thefts of bitcoins have shown. But the potential for blockchain to transform the way interactions take place around the globe intrigues many start-ups, big banks, and investors. Governments and central banks have also taken notice: by offering a way to store money outside the traditional banking system, Bitcoin creates an alternative that people can fairly easily choose over central banks. That’s a threat that lends some authority to fintech alternatives and can help keep central banks on their toes, because money outside their system is mostly unaffected by the monetary polices central banks employ to direct their economies, said professor Randall S. Kroszner.


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Game On!

A new joint-degree program—an academic one-two punch of business and tech—helped one student land his dream job in a beloved industry.

Game On!