One block at a time

Blockstream’s Austin Hill says the startup aims to change the world’s financial system using the technology behind bitcoin.

Most startups have relatively modest ambitions. Not Blockstream. Building on bitcoin technology, it aims to change the world financial system, reports business weekly Les Affaires.

Few people have heard of Blockstream, a Montreal-based startup that also has employees in San Francisco. Yet the company has recently raked in a second round of venture capital amounting to US$55 million, which comes on top of the US$21 million taken in on the first round.

Those are huge sums of money for a startup when you compare them to the amounts raised by Uber in 2011 ($11 million) and Snapchat in 2013 ($12.5 million). However, they are comparable to the $US 60 million raised by New York’s Digital Asset Funding -- Blockstream’s rival -- in its second round of financing.

Such injections of money are not a luxury, according to Blockstream’s president Austin Hill. His ambition, he says, is “to replace the international financial system, which is based on technologies that haven’t evolved in 20 years.”

In fact, Blockstream’s venture is not based on the bitcoin, but on the blockchain technology that stands behind it, a massive encrypted and decentralized file that records all bitcoin transactions. “The blockchain is seen as the main technological innovation of Bitcoin,” says Investopedia, “since it stands as proof of all the transactions on the network. A block is the 'current' part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as permanent database.”

Since this virtual equivalent of an accounting ledger can’t be penetrated and manipulated, it takes away the need for financial intermediaries such as banks.

Blockstream’s first initiative has been to launch The Elements Project, an open source code, or a sort of toolkit, available to anyone who wants to develop blockchain applications that would be compatible with each other. According to Hill, some governments are reportedly looking at the possibility of issuing a national currency based on blockchain technology.