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State College, PA – The Future of Business: Blockchain –

by Judy Loy, ChFC®, RICP® and CEO of Nestlerode & Loy, Inc.

For almost 25 years, the concept of cryptocurrency and e-money has been studied and improvements are continuously being made. The big breakthrough came when Bitcoin was released in January 2009. Bitcoin is a form of electronic money without a central bank or a single administrator. Why did it take so long to create a cryptocurrency that worked? Bitcoin and other cryptocurrencies finally succeeded because the founder of Bitcoin, Satoshi Nakamoto (an entity still unknown), also created the cryptocurrency network on Blockchain.

Electronic currencies, up to the existence of Bitcoin, had an intermediate or government control. Companies, like Visa or PayPal, are all paid for because there are third-party tracking payments, available funds and other means of payment. Blockchain has changed the need for currencies for third party verification. Basically, Blockchain has created a peer-to-peer network without the need for a central bank or administrator.

To understand the potential of Blockchain, you must first have a rudimentary idea of ​​how it works and why it is so powerful. Blockchain is a shared, immutable digital ledger that facilitates the process of transaction registration and resource monitoring. Resources can be tangible or intangible and virtually anything valuable can be traced. Inside, the Blockchain are permanent and unalterable records of every transaction.

For owners of Bitcoin and other cryptocurrencies, Blockchain allowed all anonymous owners to view the entire ledger and verify each other's transactions and holdings. Modifications in the Blockchain can not be tampered with and must be verified by cryptographic tests. I imagine that many people read this article and say "cryptographic?" I have to admit, I only have a slight knowledge of what encryption is. Encryption is writing or resolving codes. It allows you to store and transmit data in a particular form so that only those, for which it is intended, can read and process them. This means that encryption is part of what allows Blockchain to be secure, private and free from tampering.

Blockchain technology has helped with the emergence of Bitcoin but its potential for business change is explosive. For example, in my industry, verification of resources and security is of utmost importance. An investor does not want to pay $ 5,000 for Apple's shares if the seller does not really own them.

Currently, we have third-party verification through brokerage and clearing companies. A transaction takes place between two people and the brokerage companies confirm the money and the stock is available for trading. When I started investing, the transactions took five business days (known as T + 5). Therefore, if you sold stocks on Monday, you would have the money for your stock on the following Monday. That period of time was necessary because many of the stock market functions were done manually. (Before my time, the markets closed on Wednesdays to give people time to sort and match trades manually.) With technology improvement, time and transaction reviews moved faster. For example, settlement times have gone from T + 3 to T + 2 in September 2017.

Blockchain will also allow for a leap in security, risk reduction, trust and transparency. It will decentralize trading and allow trading in minutes within minutes allowing for immediate verification. This helps with the cost of trading and the speed of money through our financial system.

Another industry that will take giant steps in time and costs is supply chain management. Blockchain will allow the verification of shipments, better traceability and a reduction of the documents necessary to track shipments.

Even auditing is simplified by using Blockchain in business. As soon as a transaction is completed and the chain is added to the block and verified by all members of the Blockchain, there is no need to go back to verify or control the transaction.

Another sector capable of exploiting Blockchain technology is car dealers. Corporate leasing is mentioned in the IBM "Blockchain for Dummies" publication, which I highly recommend (The publication is free for download on the IBM website .) As mentioned in the IBM publication, you can use a Blockchain ledger to part of the participants authorized to "access, monitor and analyze the status of a vehicle." A closed network like this would save costs and time.

There are many extraordinary opportunities created by the use of Blockchain. The estimates put Blockchain at the point where the Internet was in 1990 and it will be interesting to see how it proceeds and if it has as much impact as the Internet.

Nothing contained in this article should be construed as a promise or guarantee of earnings or investment results nor a recommendation for the purchase or sale of any security or sector.

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