In today’s world cybercriminal are in their full form and in such times blockchain can change the future of the financial industry. In the month of January this year, nearly $1.8 trillion was being traded in the forex market. Such transactions clearly draw such criminals towards them. Blockchain carefully tackles such sensitive issues by using peer to peer transaction procedures.
This technology which helps firms to do transactions without any third party in between was developed initially to act as a support for bitcoin. The blockchain is shared ledger which records these transactions through a highly secured system. It combines the computing power of a distributed network and manages all the other essential aspects of commerce. Earlier blockchain was used to trade cryptocurrencies but these days it can record any kind of transactions.
The blockchain is actually a shared database which is spread across many public or private network of computers. This network uses all this computing power to keep analyzing and compiling all data such that the ledger of transactions keeps getting updated regularly. Since all the exchanges are done in a secure manner the transactions done are safe and can be trusted. All individuals and even businesses use this technology to even transfer intangible goods like equities, currencies, patents, copyrights, votes and some tangible goods like gold, commodities, property, and pharmaceuticals.
Changing business models
Such network-based business models are going to transform financial services industry. To understand let us take the example of selling equity on the blockchain. Suppose the buyer gives an order to purchase some stocks at a price. All such transactions are then put together and represented as a block which is then sent to every other user on that network. The network would then utilize all the algorithms to analyze that data and verify the buyer’s status. Once verification is over the modified blockchain is used for future processes.
The same processes are even useful for big transactions. When companies want huge investment they look for angel investors and venture capital and then finally an IPO. Blockchain eliminates all the intermediaries in between and helps the companies to raise any type of funds through peer to peer share offerings. Also known as initial coin offering (ICO) 2017 saw many start-ups raise up to $5.6 billion through this method.
Bring changes in services
When you execute trades using blockchain the transactions are faster, secure and less expensive for the clients. This is probably because blockchain involves a clear, self-auditing process. Such kind of streamlined trade eliminates all possibilities for any kind of third parties.
Such network-based business models provide benefits to brokers as well. Since the verification rules are so strict blockchain helps in increasing the efficiency of contracts.
Most firms are recognizing this as the chance to increase earnings and reduce the costs. As per a 2017 PwC survey, 36 % of firms dealing in financial services are going to invest a huge amount of money in this technology in the coming three years. The revolution in this industry has begun and very soon more and more companies would join in.Tags: Bitcoin Success Is Due To Blockchain, Blockchain, Cryptocurrencies