A blockchain is a distributed ledger that records and stores transactions on individual blocks in real-time. (Photo: Shutterstock)
While industry understanding of the potential uses and pitfalls of blockchains continue to evolve, the insurance industry has begun using blockchains to record smart contracts or self-executing insurance policies. Under smart-contract insurance policies, claims handlers may face new legal questions, which traditional principles of insurance law might help to answer.
The blockchain underlying smart contracts
A blockchain is a distributed ledger that simultaneously records and stores transactions on individual blocks. Before a transaction can be added to the blockchain, the ledger's decentralized data storage points (i.e., nodes) must reach a consensus that the transaction is valid and approve it. Each block, like a fingerprint, obtains a unique identity, which is recorded on that block and the following block, forming a blockchain.
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