The simplest way to understand blockchain is to think of it as a
vast digital ledger (or database) of transactions or information
that is shared among millions of computers, or other devices
connected to the Internet.
When blockchain is used for transactions, with each transaction
a person makes — such as sending or receiving funds —
the ledger grows. Each new transaction becomes (or forms part of) a
"block" that is added to the "chain."
What makes blockchain technology so revolutionary is that
it's both secure and can be decentralized. Through using
complex cryptography and a consensus between computer servers,
transactions can take place between unknown parties without a
central authority to grant approval.
Blockchain has the potential to reshape the financial services
industry — and much more. Here are 10 things you need to
1 It is Not Synonymous with Bitcoins
Bitcoin is a digital currency, and the technology that underlies
and supports Bitcoin is blockchain. However, blockchain technology
has functionality beyond Bitcoin.
2 It May or May Not Involve Digital Currencies
Blockchain has uses beyond sending or receiving value. For
example, it is currently used in parts of the world to track
ownership and the transfer of assets, including real estate and
3 It Can Be Used for Public and Private Transactions
There are in essence two types of blockchains: private and
public (or centralized or decentralized). A public blockchain
allows everyone to see all transactions that have taken place on
the blockchain, everywhere in the world. A private blockchain is
where permission is restricted and only permits a predetermined
group of members to access the blockchain. It is also possible to
use a combination of the two.
4 It Can Execute Contracts
"Smart Contracts" are contracts written in code so
that computer protocols facilitate and enforce the performance.
When a transaction takes place, the blockchain technology can
determine if all conditions that have been coded into the smart
contract have been met and if so, it then executes the
5 The Regulation of Blockchain Depends on its Use
How blockchain technology is regulated will ultimately depend on
its use. Where blockchains are used to transfer securities,
provisions of securities law will have application. Where the
blockchain is used to execute smart contacts for wagering (one
effective use of smart contracts), gambling law and regulation will
6 Digital Currencies are Regulated under the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act
Digital currencies, such as Bitcoin, will soon be regulated
under Canadian money laundering legislation. Recent amendments made
to the legislation include in its scope those who "deal in
virtual currencies." Moreover, these provisions will subject
those who "deal in virtual currencies" (still to be
defined) to the money services business regime of the
7 Blockchain Solutions Are Already Operating in Canada and
In addition to digital currencies, blockchain technology is
currently being used by organizations for everything from diamond
certification to maintenance of health-care records. Many major
international organizations have also recognized the potential of
the technology and are making significant investments in the
8 It Has Tremendous Potential Regarding Personal Privacy
Blockchain technology can be utilized to establish a
decentralized personal data management system that would enable
each individual user to control the use and sharing of their own
personal information. Blockchain technology serves as the protocol
that allows a user to determine when and with whom their personal
data can be shared.
9 Canada is a Leading User of Blockchain
Canada is already home to several blockchain start-ups, and
there are Bitcoin ATMs in Montréal, Toronto, Calgary and
Vancouver as well as many other locations across the country. The
Bank of Canada is also currently experimenting with digital
currency on blockchain.
10 It is Expected to be a Truly Revolutionary Technology
The scope of blockchain technology and the impact it could have
for all industries cannot be underestimated. While it is early days
for the technology, those using, or considering using, blockchain
technology should be aware of the potential it offers as well as
the regulations that may need to be navigated.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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