If you are generally interested in financial news and specifically in cryptocurrencies, you would have heard about Blockchain Technology. In simple words, Blockchain is that record-keeping journal or ledger that runs the Bitcoin network.
In a nutshell, it seeks to record, protect and authenticate every transaction that takes place involving cryptocurrencies. It is a fast, efficient, durable, and scalable system that cannot be hacked! Yes, ever since its inception, the Blockchain network has never once been hacked.
From the world of finance to healthcare, businesses are increasingly experimenting with Blockchain. In this article, we seek to discuss the top five applications of Blockchain Technology in the realm of financial services.
However, before we process the list of applications, let us first look at defining Blockchain Technology in brief detail. If you are someone that is looking to invest in Blockchain-based businesses, please read this article till the end.
Blockchain Technology: Meaning and Definition
As the name suggests, a Blockchain stores data in the form of blocks. Many small blocks make for one bigger block. As transactions as records are added, a chain connects the last block to a new one. The process keeps getting repeated chronologically.
According to experts, there are a variety of data forms and types that can be stored on the Blockchain network. However, financial transactions and services are one area that suits the network the best. The decentralized nature of the ledger means that no one has the right to alter it according to their advantage.
Every time you enter a piece of data or store a transaction, it gets stored for life. Meaning the same cannot be erased or tampered with in any way. This is great for financial transactions that are always suffering from a lack of records.
To understand Blockchain, you need to think of it in the form of a huge database. Small entries are recorded one after the other. The process is never-ending as you can store tons of data on the Blockchain network.
For more information on Blockchain and how it can help you personally in financial services, know more on this website.
List of 5 Applications of Blockchain Technology in Financial Services
- International Trade and Commerce-
In an increasingly globalized world, Blockchain technology can help overcome the problems of traditional payments networks. Verifying payment details that pass through three or four separate banking entities means you waste crucial time. Blockchain is an incredibly fast, secure, and stable way of making international payments. This can help facilitate global business.
- Smart Contracts and Agreements-
Financial agreements and terms require a lot of complex paperwork that is difficult to store, process, and execute. In recent years, Smart Contracts powered on the Blockchain network are helping financial institutions like banks and payment companies. This has aided cooperation, agreements and prevented mistakes or loss of trust and credibility to arise.
- Facilitating Clearing and Settlements-
Most businesses and brands know the problems associated with clearing and settlements. For businesses, this means the astronomical sums charged by banks and payment gateways on every transaction. According to experts, adopting Blockchain will help in eliminating the problems surrounding this. Faster and trustworthy transactions will be made possible.
- Establishing Digital Identity for Financial Services-
Every time you go for a loan, a financial institution asks you to arrange tons of paperwork and documentation. Blockchain can help in facilitating the storage of personal financial documents that can be available every time you seek to avail of financial services. This can make the entire process get accelerated. Loans can be disbursed faster if Blockchain is in place.
- Trustworthy Financial Systems build on Credibility-
Most individuals and businesses do not trust financial institutions. The hidden charges, lengthy and complex terms, and conditions all mean that they cannot be trusted. Using a Blockchain will help financial entities win back some trust, credibility, and faith. Making payments on the Blockchain can help in reducing hidden fees, conversion charges, and better remittance payments.
The Bottom Line
Some of the biggest businesses of our times are aggressively pursuing Blockchain Technology. In the following years, industries from legal to healthcare and finance all stand to benefit from Blockchain technology. If you have any other questions on how Blockchain works, or how you as an individual can benefit from the same, let us know in the comments.
Source: Plato Data Intelligence
