Blockchain Technology: Emerging Opportunities and Risks

Alpesh Doshi

When Satoshi Nakamoto first published his paper¹¹ Identification of who is actually behind the pseudonym Satashi Nakomoto remains open to debate. It could have been one person or a team, but their real identity is not known. on a new peer-to-peer (P2P) electronic cash system called “bitcoin” in 2009 – together with the software that enabled this type of system to be implemented – no-one knew the long-term impact it would have. Nakamoto’s paper and software featured an innovative new technology that he called “blockchain”, which has launched a fundamental challenge to the nature of money and trust underpinning modern commerce, and whose repercussions are only starting to be understood.

This chapter will introduce the ideas that surround blockchain, starting with bitcoin and its key components. It will then examine in more detail the foundations of the concepts, algorithms and computer science that comprise this technology. Finally, it will explore some of the characteristics of blockchain that will affect risks in the financial services sector. Although blockchain has repercussions for many sectors, this sector has been chosen since it is key to the application of this new