The "blockchain" is the technology that underpins bitcoin, a digital currency whose proponents say will revolutionise global finance. And that technology is now coming to Wall Street.

The Wall Street Journal reports that the Nasdaq is experimenting with blockchain technology in a pilot project, a move that could — if successful — transform the financial industry.

So what is the blockchain?

First of all, bitcoin is a decentralised currency — there is no central bank, no mint printing money, no governing authority maintaining records.

But records have to be maintained somehow, to ensure there is no double-spending of the currency. Instead members of the network collectively contribute processing power from their computers to maintain bitcoin's integrity. And every time a transaction is made, a record of it is sent out to be recorded immutably in a public ledger. This ledger is the blockchain.

It allows bitcoin users to cut out the middleman — one user can send another a sum of money, anywhere in the world, without having to rely on a financial institution. The transactions are effectively set in stone, with records distributed permanently across the entire network.

And the blockchain's potential extends beyond currency. There are now numerous startups working to implement the notion of a decentralised ledger in such varied applications as signing contracts, tracking conflict diamonds, and even voting in elections.

Nasdaq is hoping to bring the efficiency promised by the blockchain to other areas of finance, potentially dramatically reducing the need for lawyers and intermediaries. For now, Nasdaq is implementing the technology in its Nasdaq Private Market, which The Journal reports is "a fledgling marketplace launched in January 2014 to handle pre-IPO trading among private companies."

Previously maintained by "largely informal systems, including spreadsheets maintained by lawyers who verify transactions by hand," the blockchain could automate the entire process. Once a deal is done, the parties would cryptographically sign a contract, and the rights would be transferred over almost instantaneously — no lawyers required.

Nasdaq has shown an interest in the digital currency space before. It provided the core technology to power the New York bitcoin startup Noble Markets, but this marks the first time it has integrated bitcoin-related technology into its own systems.