It might not be considered an exaggeration to say that ‘security’, ‘finance’ and ‘trust’ go hand in hand! Since finance is all about money, ensuring that the funds are not vulnerable to threats, security cannot be compromised. Since the ledger containing all the transactions is the only reliable source, the ‘trust’ that all the involved parties have on the leger-maintainer is another important aspect.
When we introduce blockchain - the secure, immutable and transparent ledger - finance sees an unfathomable magnification in awesomeness when viewed through the blockchain-lens.
Centralization:
The old-school way of maintaining financial records, as seen earlier, was on a ledger. The problems in this method are the intentional break of trust - financial institutions operating with malicious intentions, and unintentional error - inadvertent wrong entries, as it is human-operated.
In a decentralized ledger system, there is no centralized party that alone has the powers to make entries or changes on the ledger. In fact, once a block on the ledger has been created with the transaction data, there’s no way to go back and change the details.
This decentralization and automation bring speed, trust, and security - important attributes when it comes to financing and transactions in today’s world.
Benefits of Blockchain in Finance: Blockchain has the credentials it takes to realize the existing financial systems, introducing a lot of benefits of trust, transparency, efficiency and last but not the least, inclusiveness.
Costs - In Time and Money - Sending money from one bank to another across international borders could take days, and might cost a significant amount of money - attributable to the centralized nature. However, with a distributed ledger like blockchain, the transaction can happen relatively faster and for a significantly lower cost. This potential has been realized and recognized even by global banking giants like JP Morgan, who operate their own private, semi-centralized blockchain.
Funding of Projects - There have been instances where potential businesses and projects have suffocated and failed because of want of funds. The process of funding your project in the current VC or IPO system seems a cumbersome process. However, with blockchain technology, you can finance your project using a number of methods like ICOs, STOs, and IEOs. The technology not only breaks the bureaucracy but also international borders - startups budding in remote parts of the world have accessed funds and grown, only because of blockchain.
Trust - This little word holds a lot of significance and meaning. There have been allegations that the current financial system functions for the benefit of a few. With blockchain, and the attribute of immutability it brings along, it is always possible to track transactions and weed out possibilities of malpractices. Blockchain, with its global scope, has the potential to operate in its optimal health, while being completely immune even to the currency-manipulations by governments.
Inclusiveness - All that is needed for blockchain to operate is a device with minimum computing power - the conditions that can more than adequately be filled by a smartphone. This would mean that blockchain has the potential to even render the classic brick-and-mortar back obsolete. Blockchain can take banks to even the remotest parts of the world - all that is needed is a mobile device.
Private Blockchains:Private blockchains have presented themselves as the bridges between banks and blockchains. While the immutability, security, and transparency of the technology is maintained in its default form, the ‘trust’ factor is taken outside. The participants have to believe that all the members will act in accordance with the rules.
The ‘trust’ has always been in this shape for banking, and if the advantages of speed and security can be gained, then why not private blockchains, right? This might not be the ‘everything’ but is sure ‘something’ when it comes to unifying the big Bs - banking and blockchain!
What Does the Future Hold?Based on the occurrences so far, blockchain for finance is not a fad, but a hard-hitting and influential reality. The biggest banks like JP Morgan, the technology providers like IBM, and even the stock exchanges of Malta and Germany have accepted this and accommodated blockchain. The industry, valued in the vicinity of $200 million, will reach $3 trillion in 2023 according to Cointelegraph.
Blockchain for finance was then a fad, now a reality and will soon be mandatory!
Blockchain App Factory’s wide spectrum of services including creation of exchanges, crypto coins, ICOs and STOs, will ensure that you stay in the game and stay relevant in a world where finance and blockchain are inseparable!
Topic: Blockchain - The Future of Finance... or the Finance of the Future? (Read 469 times)