How could blockchain change finance? This question has been asked a countless number of times in various forums across the world. The primary motive behind the invention of blockchain was to help in eliminating intermediaries in all financial transactions.
In simple terms, whenever a transaction occurs in the blockchain, the data created is stored in a digital block in various locations. Since the technology doesn’t have a centralized database, it becomes quite difficult to change the details of any transaction.Each blockchain is powered by a token that acts as a form of payment.
In the current world where fraud, lies, and scams characterize financial trade, blockchain technology offers an incredible opportunity for innovation, transparency, and complete disruption of the financial trade.
How Could Blockchain Technology Change Finance?
Countless internet forums, blogs, and articles have dealt with the issue of blockchain technology before. In this article, we evaluate how this revolutionary technology can disrupt the financial sector. Read on to find out.
The Introduction of Cryptocurrency
The invention of blockchain technology is changing how people think about currency. Altcoins such as Litecoin and Bitcoin have become popular means of currency. In fact, some people prefer the digital currency against traditional fiat currencies due to its free-market ideologies.
Today, it is a lot easier to use Bitcoin as a form of payment for your everyday shopping. For some people who deem Bitcoin to be too volatile, other cryptocurrencies such as TenX and Dash have come in to fill that void.
Elimination of Intermediaries in Financial Transactions
The adoption of blockchain technology in the financial sector means the end of brokers. This means that financial transactions can now be settled much faster without incurring the extra cost of paying a broker to ensure that everything is okay.
Instead of waiting for the broker to verify the funds and other details of the transaction, which can take days, you can now verify all transactions almost instantly thanks to the peer-to-peer confirmation. Whenever you make a transaction, it will be verified and relayed to other nodes within the network for approval before it is added to the chain.
Enhancing Cross-Border Transactions
Although blockchain systems are designed as public entities, they can also be protected such that only a few users with permission can have access to them.This means that the system can be made more secure to favor banks and other financial institutions with strict regulations while ensuring that transactions remain transparent.
With such modifications, the question of who is linked to a particular transaction and how much was sent will never be an issue. Blockchain technology has the potential to save billions of dollars for banks and other financial institutions by allowing back-office systems to process and record all transactions, trades,and transfers faster. Electronic ledgers are also cheaper to maintain compared to manual accounting systems that most banks are still using now.
Accounting and Auditing
While most databases are simply snapshots of a specific moment in time,blockchains are built from their own history. They are databases with a context that provide specific time stamps for every record contained in the system.This means that the overall implication of blockchains on accounting and editing can be profound.
Blockchain technology has the power to change various aspects of the financial industry. Have you have been asking yourself; how could blockchain technology change finance? Well, you already have a good preview of what this technology can do.
The technology will soon transform almost every financial aspect of our lives, from how we spend our money to how financial institutions settle payments. The more blockchain technology becomes popular, the more it disrupts the financial industry.