As our world is becoming more and more digital, we are witnessing an increase in economic activity. Transactions that once took a lot of time and effort now happen mostly digitally. The invention and development of Blockchain technology is predicted to improve the banking and financing world, as people are expecting to see many banking services relying on it soon. People are expecting to see many banking services relying on it soon.
Blockchain is a technology that helps increase the trust between two trading partners. By making it possible to successfully complete transfers of currency without having to worry about fraudulent individuals. Because of this technology, small transactions become more and more convenient, as they take less time and imply lower fees.
Many industries are starting to use blockchain for a variety of reasons. Mostly due to it being a decentralized, transparent technology. Here are some ways in which blockchain can potentially change the world of banking and financing in the next decade:
Lower fees for Direct Payments
Most bank transactions nowadays require the funds to go through a lot of intermediaries. Such as the bank itself and credit card processing networks. With each step, every service provider demands a fee for their part in the transaction. And not only this adds to the taxes involved. But it makes the whole process a lot more complicated.
Blockchain could be an alternative for a lot of merchants, in order to cut off some extra costs usually involved in card payments, such as processing fees.
Impossibility to pay with insufficient funds
Blockchain technology helps increase the security of both merchants and individuals when it comes to transactions. In the case of businesses, neither check payments or electronic payments are 100% safe. Customers could either bounce their checks, and the technology involved in checking accounts may also fail. Blockchain is a fail-safe method to ensure the transaction is legitimate.
For individuals involved in one-on-one transactions, blockchain eliminates the possibility of online scammers, as it makes the payments quick, irreversible, and impossible to fake.
It provides transaction details
Blockchain is useful in other areas as well, not just moving funds, as it is an excellent technology for keeping track of details related to every transaction, such as title details.
Transaction chains, also called ledgers, make it very easy and efficient to track the ownership of funds, since they are very hard to fake. Every single transfer of ownership goes into the ledger, making it possible to find reliable and trustworthy information about any sort of property.
This is a particularly useful asset of blockchain technology, allowing it to be implemented in other important areas. Business, for keeping track of ownerships and intellectual property. Healthcare, for keeping reliable title records. Or even politics, as it could be implemented as a secure method of electronic voting.
Another method through which blockchain can improve transactions is the creation of smart contracts. With these smart contracts, any sort of service that added cost, complexity and delays to any transaction becomes completely automated.
Smart contracts automatically monitor the date of payment for every person involved in fund transfer. Thus eliminating possible issues that may appear. A smart contract doesn’t have to be complicated, as it can simply be an impartial third-party, outside the buyer and seller. Encrypted smart contracts are also thought to improve the bidding marketplace, as they can automatize any lending decisions, making the whole process a lot faster. Through the implementation of such smart contracts, each individual’s digital rights are protected.
Due to its intricate design, blockchain can resist any form of fraud, such as hacking or DDOS attacks. Through digital ID’s enabled by the blockchain, banks and other traders have an easier time identifying their sellers quickly and accurately. Less fraud also reduces the cost of doing business, which is an improvement for very party involved.
It is a reliable technology for bank use
A lot of banks nowadays have turned to blockchain technology to secure their business. One big name is JP Morgan Chase. This American bank with headquarters in New York City has implemented a new division called The Quorum Division, which specializes in the research and further implementation of blockchain technology. Quorum is a platform for smart contacts and distribution of ledgers, supporting fast transaction and addressing the current challenges of banking, finance industry and not only.
As it seems, blockchain technology is already changing the world around us, providing both convenience and protection in banking, finances and not only.
Victoria Munson is a business reporter at Luckyassignments Edinburgh and GumEssays.