What Blockchain Holds For Financial Services
A digital ledger which enables transactions for recording and verification through smart contracts using a network of computers is encompassed as blockchain technology. Blockchain-based software is a proven, ideal solution for many emerging challenges across industries.
The question arises why do we need to know about the linkage of blockchain and financial services?
Answer is simple: Blockchain and cryptocurrency application puts its revolutionary significance in the financial sector by allowing for an exclusively anonymous, decentralized system of verification and transparent transaction initiation.
Bitcoin is pioneering, and the world’s most popular and mature cryptocurrency.
Cryptocurrency and blockchain development is seeing a wider adoption in multiple industries including financial institutions, exchanges, fintech, IoT, retail, health, gaming, eCommerce, and a lot more.
Financial transactions need an ecosystem with enhanced features of security, scalability and trust.
Blockchain technology stores specific information (database) in the form of blocks and places them in a nodal arrangement of computers in a peer-to-peer network. For instance, a Bitcoin block contains safe, verifiable and secure information about the sender, receiver, and number of transferring bitcoins.
When a new block is created, it usually adds up to the chain which is referred to as a digital ledger. What blockchain technology does is that it allows the ledger to be served on different junctions with effectively immutable data structures.
Through this approach, possibility of processing and storing the transaction data by a third party becomes negligible. Since, there is not one point of storage so no chance gets left to hack the data. Furthermore, the controlling barrier also gets removed on the transaction of the third party. This is surely an advantage that makes blockchain more worthy for financial dealings with tractability, confidentiality, and no central authority or middle men involvement.
Moving a step further, through the use of hashing and encryption, ledger also gets protected as the individuals with an exclusive code have the authority to access the data. The decentralized nature of blockchain transactions makes them next to secure.
A blockchain digital ledger is a great way to record the billions and trillions of financial records that include both personal and stock transactions. With the use of blockchain technology, there are minimal-to-no chances of unauthorized data access, breach, and misuse.
Cryptocurrencies based on the distributed ledger technology empowered by the blockchain are most likely to replace fiat. However, in the current economic system, it’s difficult to replace existing central-based banking systems with decentralized setups for financial services. Keeping in view the security concerns, blockchain transactions are of decentralized nature and ensures data privacy and protection.
Well, unlike traditional transactional systems, blockchain emerges as a revolutionary mechanism of fully secure payment and monetary exchange through cryptocurrencies and smart contracts. Moreover, blockchain-based mobile apps development is a great way for investors to keep their financial records and transactions secure and scalable without intermediary.
Over the years, banks have been brawling with the issue of verifying the customer’s identities. The aim behind this aspect is to keep away the deception and money-laundering. With the incorporation of blockchain technology, this hurdle could be put aside easily.
Blockchain offers cryptographic protection through public and private keys for secure transfer of data, money or information. It will make sure that the entities involved in the transaction are legal. This feature is mandatory for all the transactions and thereby identity verification would be without any scam.
There are so many organizations which are trying hard to provide assistance to banks by using this technology to shut off the issue of establishing identity. Registering through blockchain technology is just a one-time task. So, it will be much more convenient for both parties.
In brief, financial service providers can build a secure, faster, credible and transparent, digital identity through private blockchain applications. It will not only help businesses reduce their infrastructure cost and operational expenses, but facilitates the end-users to make transactions (data or money transfer) safely and securely with no central authority involved.