DigiMag Glacier_Q4_2017 - Page 12

TECHNOLOGY HOW THE BLOCKCHAIN IS TRANSFORMING THE WORLD OF FINANCE The blockchain is an emerging and disruptive technology that’s revolutionising the financial industry. Sonya Kuhnel, founder and MD of the Blockchain Academy in South Africa, looks at some of the technology’s use cases, and the tax implications and regulation of bitcoin in South Africa. THE BLOCKCHAIN IS A DIGITAL, DISTRIBUTED TRANSACTION database or ledger. It’s best known as the technology behind bitcoin, storing all bitcoin transactions as well as transactions of other types of cryptocurrencies, such as ether. It’s a write-only database, which means data can only be added and not edited or removed. The blockchain is decentralised, meaning it’s not stored in one location or controlled by any central authority. Multiple identical copies of the blockchain are stored and maintained, so the data on the blockchain is resistant to any single point of failure, and can’t be forged or destroyed. Cryptography protects all transactions recorded on the blockchain. Bitcoin: digital currency or investment? It’s entirely your choice. As a digital currency or cryptocurrency, you can send bitcoins to anyone anywhere in the world at any time – without the need for a bank account. Some merchants also accept bitcoin as payment. As an investment, bitcoin is very volatile and therefore a high-risk investment with the potential to offer high returns. What the blockchain can do for the financial industry Beyond bitcoin, the blockchain has many other possibilities. Many major banks around the world are researching blockchain-based technologies to build trust, and improve and streamline existing