5 Ways Blockchain Is Changing The World Of Finance
Each day, the global financial system serves billions of people by moving trillions of dollars. However, the financial system is faced with numerous problems such as crime and fraud, delays and fees, and onerous and redundant paperwork
According to Jonathan Osler San Francisco, 45% of financial arbitrators like money transfer services, stock exchanges, and payment networks suffer from economic crime every year.
Through advanced cryptography, blockchain has revolutionized the finance industry to try and manage the risks within the global financial system. Here are 5 ways through which blockchain has changed the financial system;
1. Transparency
Transparency is the most important benefit that blockchain can offer, as it leads to a more efficient market. For example, a commodity trader can see exactly what his peers are buying and selling at any time. This transparency allows him to make better decisions based on the information he receives.
Also, traders don’t have to pay expensive intermediaries because they can utilize the blockchain for all their communications. The blockchain also stores the history of each transaction. As the data is immutable and verifiable, it is easy to audit, which can help an organization improve its compliance procedures.
2. Security
In the case of hacking, the use of private keys in blockchain ensures that funds are secured even if a hacker gains access to a wallet or when someone sends funds to the wrong address. Balances of digital currency are stored on a public ledger and these private keys are used to prove ownership.
As such, people trying to gain access to funds will only have access to the money from the public address but fail to secure the private key rights. This makes the coins that have been stolen redundant since they are protected by these private keys.
Blockchain technology uses cryptography to ensure absolute security and anonymity for users. In fact, not even the people who are developing these platforms know how it works in its entirety.
3. Smart Contracts
Smart contracts eliminate the need for third-party intervention in all kinds of agreements. They can be used in many different industries. They enable the exchange of money or other assets without any downtime, censorship or fraud.
They are similar to online banking, but without the middle-man. Once a contract is set up, funds can be sent immediately since private keys are not needed for this exchange.
4. Cost Savings
The cost savings that blockchain offers are immense. A single payment, for instance, can be split up and sent in parts to several receiving parties. Therefore, a bank doesn’t have to take all the funds from one person or organization, and then send it to the others involved in the deal. Also, a bank is not needed to execute transactions since there is complete control over the money through private keys.
5. Digital Currencies
If blockchain is able to increase transparency and security, then people will start using it more often. Since the technology can also make transactions faster and cheaper, then chances of new digital currencies emerging are high.
In fact, there are already several like Bitcoin, Ethereum, Tether and other digital platforms that use blockchain. However, with the rapid rate of innovation in this technology, Jonathan Osler San Francisco predicts more currencies emerging from this space.
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