blockchain in finance
Blockchain is no longer a new term. There are trillions of people on this planet quickly adopting this technology.
Yet numerous questions arise! What is it that makes blockchain such an important matter to be adopted? How is this technology disrupting every sector one at a time?
Why is it important that we get accustomed to it? There are a billion answers. We have jotted down the most crucial ones here.
Blockchain For Financial Services
Blockchain for financial services is the talk of the town. The banks transacting trillions every day around the world, look for ways that curb any kind of unlawful acts or even hurdles in maintaining records.
When this is the case, imagine a scenario that does not require any bank’s involvement to maintain records or levy transaction charges despite the heavy movement! This is the impact of blockchain in financial services.
“The main event isn’t bitcoin. It’s using the blockchain to disrupt other industries and Wall Street.”Patrick M. Byrne
This blog is meant to keep you well informed about the use of blockchain in financial services.
What is blockchain in terms of financial services?
Blockchain was discovered in an attempt to create centralized digital currencies. Fortunate for us, they ended up discovering cryptocurrencies and blockchain.
Blockchain is a decentralized distributed ledger that stores infinite information in the form of cryptographic codes. These codes are the backbone of blockchain, in the sense that the ones that let the chain function in a certain way that it is meant to. Applied Blockchain Other Than Financial Applications?
Applied Blockchain Other Than Financial Applications?
Blockchain can be implemented in insurance companies to avoid manual verifying of crucial documents
Banking sectors can use blockchain to verify the documents and confirm the genuineness of the sender and the receiver.
It can also be used to grant loans with blockchain-verified certificates, that have higher credibility.
Cross-border transactions will no longer take hours to reach the recipient. It will now happen in an instant.
When it comes to e-commerce, blockchain will play a major role in tracking, sending and receiving products.
In yet another huge industry like the supply chain, blockchain-based tracking will play a crucial role.
Enterprise blockchain apps will enable corporate sectors to monitor their employees with much ease and freedom.
What are the major differences that make blockchain-based transactions stand apart from other regular ones?
|What is it?||A regular fiat currency that we use in everyday life.||Currencies developed with cryptographic methodology.|
|Instances||Two systems. One is fiat and the other commodity.||Two systems. One is virtual and the other is crypto.|
|Bank Verifications||Transaction code as an intimation from the bank.||Unique digital signature generated by an algorithm|
|Path of the transfer||Monitored by a centralized, trusted third party.||Monitored by public ledgers in the blockchain.|
|Transaction cost||Heavy transaction cost depending on the bank.||Overall minimal transaction cost universally.|
|Volatility||Fluctuates according to economic conditions||Fluctuates based on supply of coins and demands.|
|Transaction Time||Reaches the recipient after hours of transferring.||Reaches the recipient in not more than a minute.|
|Security||Centralized. Vulnerable to one point failure.||Decentralized. No chances of one point failure.|
What are the benefits of blockchain in financial services?
This is the biggest irony that the world has to face now. The whole of the blockchain was predominantly created for financial solutions. Now, we are here, discussing how it would benefit the financial industry.
“As the value goes up, heads start to swivel and skeptics begin to soften. Starting a new currency is easy, anyone can do it. The trick is getting people to accept it because it is their use that gives the “money” value.”– Adam B. Levine, the founder of Let’s Talk Bitcoin, CEO at Tokenly.
This is one spot for the entire finance industry where it would need improvement throughout all the years. People have been transferring money across the borders for a long period of time right now.
The tales of fraud withdrawals and insecure transactions are an everyday thing. This does not seem to stop. However, with blockchain financial applications, there is ample chance that everything can be brought back to normalcy.
Blockchain-based transactions are saving time, money and energy for the banks and its users.
The distributed and decentralized nature of blockchain keeps it off the hackers to a great extent. Even if a time comes when the need for fiat completely goes downhill, crypto will be of wonderful backup.
It requires every node of the block to approve the recently conducted transaction. In such a case, there could be no false transactions at all. This is huge save for the entire banking sector.
Though it mostly seems like automation, a lot of processes require immense effort to verify and take accounts. This is a hindrance to the money to reach the desired recipient.
Now comes the other type of financial service that requires blockchain’s assistance to improvise!
The Insurance Industry is jammed with people trying to prove their identities and the records of the reasons for claims.
With blockchain-verified certificates, proving one’s identity becomes much easier. Also, the nodes verify the authenticity which is considered more authentic than the regular certificates from centralized authorities.
The major reason being the nodes cannot be bribed and are of huge importance when it comes to verifying the transactions. The transactions could be anything, say document exchanges between the companies and its clients, or even typical insurance costs.
Now comes the other major part when lending or borrowing money across the borders.
The finance sector faces numerous fraudsters while lending money. This is the main cause that needs a smart contract.
Smart contracts are typical traditional contracts with a blockchain twist. These act according to the codes written for them. When two parties agree upon the given terms and conditions the contracts execute the function.
This is a seamless way to verify proofs when required to claim insurance or the amount required.
“Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.”— Marc Kenigsberg, founder of Bitcoin Chaser.
In less than a decade cryptocurrencies will become mainstream and fiat will no longer be valued. The wisest move would be to adapt ourselves to this new technology before our rivals, do.
If you are at an early stage of adaption and require abundant knowledge about the right investments, never hesitate to walk into our office. Our doors are wide open and you are welcome anytime.
- Banks and other concerns in the finance industry are ransacking ways to simplify their processes.
- Knowing blockchain has got all that they want to declutter things, most companies have started research and tests with this technology.
- This technology can be used to grant loans with blockchain-verified certificates, that have higher credibility.
- Cross-border transactions will no longer take hours to reach the recipient. It will now happen in an instant.
- Smart contracts will play a crucial role in performing contract-based transactions.
- The hard-earned certificates will no longer be valuable if it is not blockchain verified.