This is one of the most asked questions on many online forums worldwide. It is understandable since the question is an important one. Can this new innovation change financing forever or not? The primary goal of the blockchain innovation was to eliminate the need for any intermediaries when dealing in monetary transactions.
For anyone new to the blockchain innovation, it is vital to understand how blockchain stores information regarding processing transactions. Whenever a user performs a transaction, it goes into a digital block. Since blockchain innovation follows a decentralized protocol, it is difficult to modify the knowledge of every transaction. For this purpose, each chain is given a token which acts as a payment mode.
Blockchain offers users an opportunity of modification, openness and complete division of retail business with the risks of scams, lies, and hacks.
How can Blockchain innovation Modify Finance?
There are countless articles and discussions you may come across that describe how this new innovation will change the working of financial setups forever. In this article, we shall list a few and see for ourselves.
Blockchain innovation has changed the way people view currencies. Today, Bitcoin or Litecoin have become common household names. Since they support free-market ideologies, many people are choosing altcoins over fiat currencies.
Its partnership with Visa and MasterCard only makes purchasing of everyday things even easier. For those who still believe that cryptocurrency can be unpredictable, they need to learn about TenX and Dash.
Elimination of Intermediaries
Blockchain innovation in financial industries will mean an end for the broker market. Intermediaries will soon be eliminated since monetary transactions become quicker and easier to handle. Instead of having to wait for the broker’s confirmation about the transference of funds (which can take days), they can be verified via the peer-to-peer verification. How? Whenever a client makes a transaction, it gets passed onto other noes for validation within the network. Once it has been approved, only then it is added to the chain.
Improving Cross-Border Transactions
Blockchain systems are public entities. They can be protected with only a few users accessing them. This allows the system to become a safe and secure platform and favor financial institutions following strict policies to ensure transparent transactions.
With this in the framework, it will not be concern who processed a transaction or how much cash was withdrawn. Moreover, blockchain innovation can help banks converse billions of dollars by allowing back-office systems to record trades, transactions, and transfer. After all, an electronic journal is much easier to keep an account for than a manual journal used by most banks.
Accounting and Auditing
A blockchain is made from its history, unlike other databases that are just pictures of a specific moment in time. There is a time stamp for every transaction recorded and stored in a system. This means that the global implication blockchain innovation on auditing and accounting may be extensive.
So now you know how blockchain innovation can alter the many aspects of financing. As predicted, this innovation will go on to change the way we invest and settle payments in financial institutions. The more popularity this technology gains, the more difficult it will become for financial institutions to survive.