Blockchain has become somewhat of a buzzword recently, you hear it all over the place. But that’s for a good reason, because it can be applied to almost any field. But first off, what exactly is Blockchain? You might have heard Blockchain come up when reading about cryptocurrency. The blockchain is essentially the tech behind cryptocurrency, and the way it works is like an append-only digital ledger. The ledger can hold new information, but the previous information, stored in blocks, cannot be edited, adjusted, or changed. To better understand the application of Blockchain, let’s look at how it can be used in the finance sector.
At its core, Blockchain is all about connecting people from all over the world. And not just people, but also data, information, content and more. And the more people are connected – the better. Through people, more startups and services are generated, creating a chain reaction that’ll get the whole world connected eventually. One interesting result that came out of Blockchain is the Crypto Code is a trading software that can help you get started in trading. And this is just the tip of the iceberg, there are many other uses and applications that came out of Blockchain.
Back on the topic of finance, Blockchain can help reduce fraud and make money transfers safer. Did you know that over 45% of financial institutions suffer from economic crime annually? This is because there is usually a centralized database (of a bank, for example) that can be attacked. Through Blockchain, this is not the case as a decentralized database takes its place.
3. Digital trust
To verify transactions and provide trust, banks currently use specific settlements (e.g. some form of identification) to connect the two parties. Through Blockchain, this won’t be necessary and people would be able to transfer funds without intermediaries, which would cut costs significantly.
4. Know Your Customer
KYC (or know your customer) is an essential component for all financial sectors. The intent is to minimize criminal activities and fraud. In a centralized model, KYC can be slow and time-consuming where different teams are required to carry out certain tasks. Blockchain makes the whole process smoother by requiring one source of digital ID information to allow for the smooth sharing of documents.
Finally, Blockchain can revolutionize the way we do payments altogether. As of now, the payment process has a lot of middlemen and intermediaries. Blockchain eliminates the need for this and removes the unnecessary third party. This saves you time, money, and a lot of bureaucracy of going through legal documents. There are already banks using this technology to empower their customers to make real-time payments any time of the day to any country in the world. And this is just the beginning for Blockchain. We’re still in its early phases. If you want to see what it’s truly capable of, we have to wait and see further uses in the future.