What is Block Chain ?
Block chain is a distributed ledger in which transactions (e.g. involving digital currencies or securities) are stored
as blocks (groups of transactions that are performed around the same point in time) on computers that are
connected to the network. The ledger grows as the chain of blocks increases in size. Each new block of
transactions has to be verified by the network before it can be added to the chain. This means that each
computer connected to the network has full information about the transactions in the network.
advantages and the disadvantages :
Frequently cited benefits of Block chain are its transparency, security and the fact that transactions are logged in
the network.
Some of the disadvantages currently include the lack of coordination and the scalability of this technology. One of
the best-known applications of Block chain technology at the present time is bitcoin. Transactions in this virtual
currency are largely anonymous. This creates ethical risks for financial institutions dealing with users of this
currency, because they are unable to (fully) verify their identity.
Potential applications of Distributed Ledger Technology and Blocked Chain::
Distributed ledger technology is an innovation with potentially broad applications in financial market infrastructures
(FMIs) and in the economy as a whole. Its most common use at present is for digital currencies, but firms are stepping
up their R&D activities for other uses including securities trading, smart contracts, and land and credit registries.
It has also been observed thatmarket participants in other securities markets are exploring the usage of Block chain or
Distributed Database technology to provide various services such as clearing and settlement, trading, etc. Indian
securities market
may also see such developments in near future and, therefore, there is a need to understand the benefits, risks and
challenges such developments may pose.
......................................
Distributed ledgers Technology (DLT) ::
Distributed ledger technologies (DLT) provide complete and secure transaction records, updated and verified by users,
removing the need for a central authority. These technologies allow for direct peer-to-peer transactions, which might
offer benefits, in terms of efficiency and security, over existing technological solutions. It is an innovation with
potentially broad applications in financial market infrastructures (FMIs) and in the economy as a whole. Its most
common use at present is for digital currencies, but firms are stepping up their R&D activities for other uses including
securities trading, smart contracts, and land and credit registries. If widely adopted, distributed ledger technology can
pose new challenges for regulation
The major benefits are reduced cost; faster settlement time;reduction in counterparty risk; reduced need for
third party intermediation; reduced collateral demand and latency; better fraud prevention; greater resiliency;
simplification of reporting, data collection, and systemic risk monitoring; increased interconnectedness; and
privacy.
Block chain is a distributed ledger in which transactions (e.g. involving digital currencies or securities) are stored
as blocks (groups of transactions that are performed around the same point in time) on computers that are
connected to the network. The ledger grows as the chain of blocks increases in size. Each new block of
transactions has to be verified by the network before it can be added to the chain. This means that each
computer connected to the network has full information about the transactions in the network.
advantages and the disadvantages :
Frequently cited benefits of Block chain are its transparency, security and the fact that transactions are logged in
the network.
Some of the disadvantages currently include the lack of coordination and the scalability of this technology. One of
the best-known applications of Block chain technology at the present time is bitcoin. Transactions in this virtual
currency are largely anonymous. This creates ethical risks for financial institutions dealing with users of this
currency, because they are unable to (fully) verify their identity.
Potential applications of Distributed Ledger Technology and Blocked Chain::
Distributed ledger technology is an innovation with potentially broad applications in financial market infrastructures
(FMIs) and in the economy as a whole. Its most common use at present is for digital currencies, but firms are stepping
up their R&D activities for other uses including securities trading, smart contracts, and land and credit registries.
It has also been observed thatmarket participants in other securities markets are exploring the usage of Block chain or
Distributed Database technology to provide various services such as clearing and settlement, trading, etc. Indian
securities market
may also see such developments in near future and, therefore, there is a need to understand the benefits, risks and
challenges such developments may pose.
......................................
Distributed ledgers Technology (DLT) ::
Distributed ledger technologies (DLT) provide complete and secure transaction records, updated and verified by users,
removing the need for a central authority. These technologies allow for direct peer-to-peer transactions, which might
offer benefits, in terms of efficiency and security, over existing technological solutions. It is an innovation with
potentially broad applications in financial market infrastructures (FMIs) and in the economy as a whole. Its most
common use at present is for digital currencies, but firms are stepping up their R&D activities for other uses including
securities trading, smart contracts, and land and credit registries. If widely adopted, distributed ledger technology can
pose new challenges for regulation
The major benefits are reduced cost; faster settlement time;reduction in counterparty risk; reduced need for
third party intermediation; reduced collateral demand and latency; better fraud prevention; greater resiliency;
simplification of reporting, data collection, and systemic risk monitoring; increased interconnectedness; and
privacy.
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