A blhain is a shared digital ledger that allows transactions to be recorded and verified electronically over a network of computers without a central ledger. Cryptography is used to protect the data from fraud or hackers.”
Cryptocurrencies and their underlying blockchain technology are being touted as the next-big-thing after the creation of the internet. One area where these technologies are likely to have a major impact is the financial sector. The blockchain, as a form of distributed ledger technology (DLT), has the potential to transform well-established financial institutions and bring lower costs, faster execution of transactions, improved transparency, auditability of operations, and other benefits.
Blockchain in payments
Benefits of Blockchain in Financial Services
Improving transparency. Blockchain can make the financial industry more transparent since users are performing activities on a public ledger.
Adding security. As consumers become increasingly active online, the digital universe is a breeding ground for scammers. With blockchain technology, this concern could be reduced. Payments and money transfers made on the blockchain are faster and more traceable than in traditional banking.
Lowering costs: As investors move away from financial advisors to avoid higher fees, blockchain provides an opportunity for consumers to benefit from lower costs associated with traditional financial services.
Risks that Blockchain and Financial Institutions Face
“Existing regulation does present a significant obstacle for blockchain adoption since regulators will prioritize existing incumbents over disruptors,” Tatibouet says.
Regulators are working through determining the pros and cons of blockchain technology to see if it’s suitable for financial institutions and what the consequences are for companies and consumers.
“This rigidity has stifled innovation so far,” Tatibouet says. “However, this view is changing as governments and other public organizations are seeing the benefits of this technology.”
The unstoppable force of blockchain technology is barreling down on the infrastructure of modern finance. As with prior paradigm shifts, blockchain will create winners and losers. Personally, we would like the inevitable collision to transform the old money machine into a prosperity platform for all.
