Blockchain technology, originally created for Bitcoin, is a distributed ledger that is tracking transactions and everything of value and is keeping them secure. This technology is the reason why Bitcoin and other cryptocurrencies are working successfully. A lot of people believe that blockchain is the next revolution in the world, just like the Internet was a long time ago.
There are many industries, sectors and organizations that have started implementing blockchain technology into their businesses. Not only the blockchain is changing the industries, but it is also changing the industries’ opinions on how to operate their businesses. Blockchain is expected to revolutionize a lot of industries, such as healthcare, energy sector, real estate, stock market, etc. However, one of the biggest industries that will be completely changed by the blockchain is the finance industry.
Even though the banks and other financial institutions have already improved their way of work by implementing digital technologies, they still have work to do in order to modernize their business. Blockchain is the ideal solution for financial institutions.
Currently, banks in a particular country are using a secure database in order to collect transactions by their clients. In order for a bank to do a transaction from one country to another, the database has to be opened and closed at both ends. This process is very complicated and takes a lot of time to process. Blockchain technology can change that. It allows worldwide transactions without the need for opening and closing the databases, and it will cut the whole process – everything will be done in a minute.
If blockchain is implemented into the financial sector, the banks will be able to transfer money much faster and safer and in a short time, which will give them a place for making more investments. Blockchain is cutting the middlemen, which leads to huge savings.
Moreover, banks can use blockchain to keep track of the transactions. For example, a smart contract can control when a client makes a payment and when a seller delivers at the end of the deal. They are properly programmed, leaving no place for failure or complication.
The process of trading is composed of three parts – execution, clearing and settlement. Blockchain technology can make the whole trading process simpler and easier. With cryptocurrencies, the trade is a settlement, and the cryptographic keys are able to improve the process and to lower the risks.
The databases of the blockchain technology are created by their own transaction history. This will be beneficial for accounting and auditing where most of the databases are momentary snapshots. Furthermore, blockchain technology allows complete record that is able to register all transactions from the beginning of a company, without the need of human data input. That’s how the regulators will be able to access any information they need.
Blockchain technology has the power to change important parts of the financial industry. From the way we spend money, to the way banks are doing payments, blockchain is rapidly changing the world we live in. The distributed ledger technology has gained attention from all over the world, and it is expected that the financial industry will completely be changed with the help of blockchain.