In November 2013, Bitcoin reached a tipping point when its value soared to $900 and Federal Reserve Chairman Ben Bernanke told US Senators that virtual currencies “may hold long-term promise” if continued innovations resulted in a “faster, more secure and more efficient payment system” (Fortune 2013). According to Canada’s Senate Committee on Banking, Trade and Commerce, however, “the real innovation is [the] blockchain technology” underlying Bitcoin.
Blockchain technology uses decentralized networks of computers to securely publish anonymous yet verified transactions to a public ledger, deploying cryptographic hashes that validate and record the history of each interaction. As a result, blockchain technology has the potential to allow individuals to control their online identity and to support new services, including banking for the disenfranchised in the developing and developed world (Senate Canada 2015).
With the shift to digital commerce and networked communication, “most financial assets today exist as purely digital records” (Bank of England 2014).
While blockchain can provide assurances that a transaction has taken place, the technology presents risks as well as opportunities. From a legal perspective, Bitcoin risks are known to include money laundering, terrorist financing, and tax evasion (Senate Canada 2015); from a recordkeeping perspective, blockchain risks cluster around organizational control, record reliability and authenticity, long-term digital preservation, and monetization. To begin addressing these challenges, this knowledge synthesis will investigate writings in a variety of media, such as social media, technological magazines and newsletters, legal journals, government reports and peer reviewed journals showing the potential impact of blockchain technology for use in recordkeeping.
Project Team: Vicki Lemieux and Steve Thompson