Opinion

Finance and Blockchains

By Kim Schoenholtz and Stephen Cecchetti

Kim Schoenholtz

A blockchain is a record-keeping mechanism. In that sense, it is simply a 21stcentury version of the recording systems that have been around since people started chiselling marks on cave walls.

Blockchain is all the rage. We are constantly bombarded by reports of how it will change the world (e.g. Casey et al. 2018). While it may alter many aspects of our lives, our suspicion is that they will be in areas that we experience only indirectly. That is, blockchain technology mostly will change the implementation of invisible processes – what businesses think of as their back-office functions.

In this column, we briefly describe blockchain technology, the problem it is designed to solve, and the impact it might have on finance. 

Blockchain basics

A blockchain is a record-keeping mechanism. In that sense, it is simply a 21stcentury version of the recording systems that have been around since people started chiselling marks on cave walls. Over the millennia we have moved from ledgers that are carved into clay and stone to ones that are digital.

Read the full VoxEU article.

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Kim Schoenholtz is the Henry Kaufman Professor of the History of Financial Institutions and Markets in the Economics Department and Director of the Center for Global Economy and Business.