How Blockchain Technology Could Change Our Lives?
Blockchain could protect consumers and creators of digital works of all kinds by recording the ownership history of digital property and perhaps even by enforcing digital rights. The blockchain could be used to register all sales, loans, donations, and other such transfers of individual digital artifacts. Blockchains are a remarkably transparent and decentralized way of recording lists of transactions. Their best-known use is for digital currencies such as Bitcoin, which announced blockchain technology to the world with a headline-grabbing 1000% increase in value in the course of a single month in 2013. This bubble quickly burst, but steady growth since 2015 means Bitcoins are currently valued higher than ever before. There are many different ways of using blockchains to create new currencies. Hundreds of such currencies have been created with different features and aims.
The blockchain, as a form of distributed ledger technology (DLT), has the potential to transform well-established financial institutions and bring lower costs, faster execution of transactions, improved transparency, auditability of operations, and other benefits.
The way blockchain-based currency transactions create fast, cheap and secure public records mean that they also can be used for many non-financial tasks, such as casting votes in elections or proving that a document existed at a specific time. Blockchains are particularly well suited to situations where it is necessary to know ownership histories. For example, they could help manage supply chains better, offer certainty that diamonds are ethically sourced, that clothes are not made in sweatshops and that champagne comes from Champagne.
They could help finally resolve the problem of music and video piracy while enabling digital media to be legitimately bought, sold, inherited, and given away second-hand like books, vinyl, and videotapes. They also present opportunities in all kinds of public services such as health and welfare payments and, at the frontier of blockchain development, are self-executing contracts paving the way for companies that run themselves without human intervention.
How the Blockchain Will Impact the Financial Sector?
Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. To wit, 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.
It is not surprising to know how much it will impact the global financial system. In the global market, there has been a transaction of trillions of dollars between billions of people daily. The technology from today may not work well in the future. As technology grows, people need to find issues with the current system. Without innovation, there is a possibility of delays, fraud, additional fees, and extraneous paperwork. In the current world, 45% of financial intermediates fall as a victim of crime. However, the number may vary by country but still, there is a risk of billions of dollars every day. Blockchain technology may bring some innovative systems that may relieve the people from the current obstacles.
- Innovation is the Key
Media is one of the most famous digital innovation. In the finance industry, the media has a big impact. People from 1970 and 1980 made web pages that have been migrated to mobile apps now. This revolution in computers & the internet is the bigger innovation till now. However, this revolution has not created any relief for cross border transactions. Banks are becoming complex and other agencies are running the same business daily. However, the people are using the infrastructure for cross-border banking that has been in place since the ’70s. This architecture is highly secured but still, there is a risk that all the information in the database is not secure & faster.
- Cross-border transactions
Blockchain technology allows people to make a direct connection. This system creates a direct link between each other, avoiding any middleman intervention. Some innovative database systems can help financial institutions to keep track of the execution. Moreover, it is now possible to settle the transactions without any involvement of the central database or management system.
The blockchain technology will allow the bank to formalize the secure digital relationships between themselves. In that case, the correspondence by banking agreement and RTGS will be easy for the consumers. Transactions will happen between the two parties on a P2P basis. However, Ripple has the permission of blockchain that was built to solve these problems.
- Introduction of Digital asset
As we all know, Bitcoin has created a revolution among the people about the concept of digital currency. The digital currency works within a second and people can operate it with a click of a button. At the time of the invention of bits & bytes, people used to think that there will not be any way to copy digital information. However, on this day, bitcoin’s value is based on the capacity of its blockchain that prevents double-spending.
With this in mind, bitcoin developers have forged colored coins to act as stock in a company. The ‘color’ represents the information about ownership rights and privacy. After the permission of the SEC, one of the giant retail stock Overstock announced that it would issue public shares on the blockchain platform.
Moreover, the crypto-related people know well about the Initial Coin Offerings and Appcoins. However, this example is just a part of the story for blockchains in digital assets. Besides the digital asset, Blockchain technology has the capacity to run the whole market itself. These efforts are creating digital assets as a bearer, which is a wide and expert application.
- Governance and markets
The financial markets will enjoy the ability to record and perform the transactions within a second. However, NASDAQ has built a platform that enables private companies to issue and trade shares using blockchain technology. Moreover, other developers are working to introduce preprogrammed financial instruments to carry out corporate actions and business logic.
The name of the Blockchain was DAO in 2016. It used ethereum blockchain to run. It has launched with the aim of emulating a crowdfunding market. People can use the system with the percentage of their investment in the relevant sector.
- Accounting and auditing
The databases of Blockchain have their own transaction history. They are a database with a self-contained system of record. There is no extra hassle to store data comparing the traditional database systems.
The distributed ledger technology has been on a fiery growth path over the last few years. The investment in the blockchain industry has increased to $1.4 billion between 2014 to 2016. However, in 2017, experts predict the possibility that 80% of banks will start blockchain projects.
There seems to be no doubt that blockchain technology will evolve and impact traditional financial institutions. Therefore, we all need to continue to know how technology impacts us in terms of productivity, safety, and security.
- Regulatory compliance
Blockchains can serve as a transparent and accessible system for regulators. There are some codes to authorize transactions that comply with regulatory reporting. The banks have several reporting obligations to agencies fintech. The authorization of the transactions can allow transactions of more than $10000 in a single time. In the Fintech industry, people can use it as an anti-money laundering database.
- Clearing and Settlement
In paper-world trading, the time frame for clearing of a transaction is referred to as ‘T+3’. It means that after 3 days, the transaction will settle. However, In blockchain technology, The lifecycle of trade has three-phase- execution, clearing, and settlement. In the digital assets, the trade settlement is the primary phase. Moreover, the cryptographic keys and digital ownership can control lower post-trade latency and counterparty risk.
The blockchain system is often not for all consumers. The main users of this technology are Business investment firms. However, in comparing the traditional paper money, it is a clear future for the finance and investment sectors.