-Saravanan is the founder & CEO of Greens Technologies, a Blockchain-based record keeping solution for businesses &, A Blockchain Consulting, Development & Training hub.

A blockchain is an anonymous online ledger that uses data structure to simplify the way we transact. Blockchain allows users to manipulate the ledger in a secure way without the help of a third party. A bank's ledger is connected to a centralised network. However, a blockchain is anonymous, protecting the identities of the users. This makes blockchain a more secure way to carry out transactions. The algorithm used in blockchain reduces the dependence on people to verify the transactions. This technology used for recording various transactions has the potential to disrupt the financial system.

How it works?

According to Saravanan, Co-founder of India's leading bitcoin blockchain training institute, Greens Technologys, "blockchain enables two entities that do not know each other to agree that something is true without the need of a third party. As opposed to writing entries into a single sheet of paper, a blockchain is a distributed database that takes a number of inputs and places them into a block. Each block is then 'chained' to the next block using a cryptographic signature. This allows blockchains to be used as a ledger which is accessible by anyone with permission to do so. If everyone in the process is pre-selected, the ledger is termed 'permissioned'. If the process is open to the whole world, the ledger is called unpermissioned."

Why are banks interested?

All major banks are experimenting with blockchain as they can use it for money transfers, record keeping and other back-end functions. The blockchain application replicates the paper-intensive international trade finance process as an electronic decentralised ledger, that gives all the participating entities, including banks, the ability to access a single source of information. It also enables them to track documentation and authenticate ownership of assets digitally, as an un-alterable ledger in real time. Indian IT service providers like Infosys and TCS have been throwing their weight around blockchain technology. Both these companies are using blockchain mechanism to create core banking platforms for banks.

Where can it be used?

Use of blockchain technology is not limited to the financial sector. It is being used in many other areas. For example, Honduras government has put all land records on a public ledger - the blockchain. The minute there is a change in ownership, it gets recorded publicly. The Australian Securities Exchange (ASX) announced this year that it would move Australia's equities clearing and settlement system on to blockchain. In October 2015, Nasdaq unveiled Linq, a solution enabling private companies to digitally represent share ownership using blockchain-based technology.

Is it safe?

The USP of blockchain is that it allows two parties to execute a transaction without any intermediary. Blockchain allows financial institutions to execute and verify transactions discretely without any human intervention. The electronic ledger of transactions is continuously maintained and verified in 'blocks' of records. With the help of cryptography, the tamper-proof ledger is shared between parties on computer servers. Experts believe that blockchain architecture can significantly bring down the costs and reduce inefficiencies in the financial sector.

What's a Bitcoin?

The term Bitcoin actually refers to two different things. Capital-B Bitcoin is a payment network—like MasterCard is a payment network. Lower-case bitcoin refers to the currency of the Bitcoin network—much like MasterCard uses dollars in the United States. What makes Bitcoin different from MasterCard, PayPal, and other payment networks that existed in 2008 (when Bitcoin was invented) is that Bitcoin was the world's first payment network that's completely decentralized. The MasterCard network is operated by MasterCard Inc., but there's no Bitcoin Inc. in charge of the Bitcoin network. Rather, it's a peer-to-peer network that maintains a shared transaction ledger called the blockchain. Inventing a new currency was an unavoidable consequence of making the Bitcoin network fully decentralized. On a conventional payment network, the network owner promises to redeem balances for conventional currencies like dollars or euros. But there's no Bitcoin company, so there's no one to guarantee that Bitcoin balances will have any particular value. Instead, bitcoins float against conventional currencies, with their value determined by supply and demand. And no, those physical "bitcoins" you see in a lot of pictures aren't what a bitcoin "really" looks like. Bitcoins are just entries in the Bitcoin blockchain. If you own some bitcoins, that means you have some cryptographic private keys stored on your computer, on an external drive, or printed out on a piece of paper somewhere. These keys allow people to spend bitcoin balances in much the same way that the password to your bank's website allows you to spend the balance in your bank account. But you can't withdraw bitcoins from the network the way you withdraw physical currency from your bank.