Blockchain Digital Public Ledger Brings Paradigm Shift to Financial Trading
The new Blockchain public ledger account system is expected to bring about tremendous changes in global financial markets. Block stands for account transaction records, and Chain signifies the link between these accounts. These factors combine to make blockchain ideal for overseas remittances and stock. Let’s take a look at Blockchain and the wide range of changes and benefits that it will bring to the finance industry and our life.
Digitalized Public Ledger - Blockchain
Blockchain’s high-profile technology allows data to be distributed to all users instead of archived in one central server. This means all data can be distributed, stored and managed between network participants. Blockchain is considered one of the most promising technologies in the FinTech industry where finance meets information technology (IT).
All blockchain accounts are divided into three distinct categories: public, private, and corporate.
Public Blockchain systems such as Bitcoin can operate without the help of third party financial assurance agencies.
In addition to heightened convenience, blockchain is also more secure. Unlike other systems, blockchain is nearly invulnerable to external attacks. All information delivered to the blockchain is managed by a computer and is accumulated in the block data chain. This change is expected to bring revolutionary changes in financial services as well as overseas remittances, stock trading, electronic payments, microinsurance and other areas that require sensitive personal information.
Blockchain takes the Financial Sector by Storm
While modern consumers can make almost any purchase with the simple swipe of a card, the financial infrastructure that makes these transactions possible is extremely complex. The moment a card is swiped, the card reader sends payment information to Value Added Network (VAN) services operator. The information passed through the VAN is then electrically transmitted to card companies, banks and the central payment system between banks before the amount is reimbursed to the store. An enormous budget is required to maintain this complicated system, so card companies charge customers a commission in order to use their network.
In contrast, blockchain is quite different. If blockchain is adopted for banking transactions, it will allow participants to individually verify transaction and store ledger accounts, significantly reducing the steps required to make a transaction.
First off, money transfer is available without relying on banks to the transaction possible. A block is generated for every new transaction and is linked to the participant ledger to form a blockchain – a trading system with no ledger account manager. The simplified verification also requires no overseer, offering the opportunity to reduce commission fees.
The Current State of Blockchain Technology
While there are plenty of reasons to be optimistic about the capabilities of blockchain, it is important to remember that the technology is still in its infancy. However, a number of prominent companies are convinced that blockchain represents the way forward. Projects designed to find non-financial applications for blockchain are being funded by Microsoft and IBM, with the Linux Foundation at the center.
These companies are working together to bring the technology to the trade finance sector, in order to conduct real-time monitoring on invoices of sale receivables and letter of credits as well as providing money transfer services to international banks.
The advent of blockchain will make transferring money between countries just as simple and straightforward as domestic transfers. Users will also be able to purchase Bitcoin from the internet and transfer money directly to a foreign bank account. The system can also be used for stock trading, electronic payments, insurance claims, and evaluation, trade finance, and more.
A prominent card company has also indicated its faith in the technology, announcing plans to introduce an individual verification system utilizing blockchain. Current verification process only allows customers to sign in to a mobile app card or make small payments. However, simplified blockchain verification services only require users to type a pin number to sign in. This both enhances security and lowers costs for users.
However, it is important to remember that blockchain still has several barriers to overcome. One significant problem is that it offers limited storage capacity to store all transaction records. Furthermore, completed transactions cannot yet be canceled and it is impossible to identify the responsible party when a transaction goes wrong.
The World Economic Forum (WEF) has picked blockchain as one of the top 10 emerging technologies for 2016, along with Internet of Things (IoT), autonomous vehicles, and next-generation batteries. Blockchain is expected to be applied to all areas that involve extensive record keeping, such as IoT, distribution systems, public data as well as finance. The emergence of Blockchain will kick start a 4th industrial revolution and increase transparency around the world.
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