Blockchain is the technology that creates a ledger of transactions on the internet that is secure, tamper-proof, and easily accessible. Like the internet, blockchain has no central authority instead, it is a shared record of transactions distributed over a waste network of users.
Benefits of Blockchain in Financial Services
Blockchain has the potential to make the financial services industry more transparent, less susceptible to fraud and cheaper for consumers. Over the last five years, the technology has matured for enterprise-grade use demonstrating the following benefits:
• Improving transparency
Blockchain can make the financial industry more transparent since users are performing activities on a public ledger. This transparency can expose inefficiencies like fraud, leading to problem-solving that could reduce risk for financial institutions.
• Reduced fraud
Blockchain stores information in a ledger with transaction information within each block, along with a unique hash that refers to the previous block. Every person within the network receives a copy of the transactions as well. Because of these features, blockchain technology is resistant to distributed denial-of-service attacks, hackers, and other types of fraud. Without the threat of cyber-attacks, the expense of conducting business is reduced, helping all parties involved save money and stress.
• Adding security
As consumers become increasingly active online, the digital universe is a breeding ground for scammers. With blockchain technology, this concern could be reduced. Payments and money transfers made on the blockchain are faster and more traceable than in traditional banking.
It provides market-leading tools for granular data privacy across every layer of the software stack, allowing selective sharing of data in business networks. This dramatically improves transparency, trust and efficiency while maintaining privacy and confidentiality.
It’s private and hybrid networks are engineered to sustain hundreds of transactions per second and periodic surges in network activity.
• Lowering costs
As investors move away from financial advisors to avoid higher fees, blockchain provides an opportunity for consumers to benefit from lower costs associated with traditional financial services
Blockchain technology has gained tremendous adoption due to its intrinsic strengths to tackle secured, the transparent and cost-efficient flow of transactions. It is the technology that started with bitcoin and other cryptocurrencies and has expanded into almost every industry. It is a protocol or a way to record transactions using complex algorithms and encryptions that results in the transactions being trusted, irrevocable, and easily available to everyone in the system. Blockchain technology has been the biggest accelerator for the transformation of financial services such as stock market, banking, asset management, and insurance.