Before the rise of Bitcoin and cryptocurrencies, most people had never heard of blockchain. However, the underlying foundations of blockchain as we know it today, such as distributed ledger technology, were already years in the making.
We'll explore distributed ledger technology along with other technical aspects of blockchain throughout this course. But before we do that, let's look at how blockchains came to be, beginning with the collapse of the Lehman Brothers.
The Lehman Brothers
Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States. The bank had become heavily involved in the mortgage market and owned mortgage seller BNC Mortgage.
By 2008, the bank held 30 times more in real estate than it had capital - and had been borrowing too much money to fund its mortgage investments.
However the market turned and Lehman Brothers had held on to, or could not sell, so many low-rated mortgages. Investor confidence in the firm declined, leading to its crash in September 2008.
Many people felt that the lesson to be learnt was that large-scale global banking could not safely be entrusted to private banks. Internal corruption and individual greed, unfortunately, led to a financial crisis and recession, betraying both public and private trust.