Blockchain is propagating, thus transforming economies, businesses, infrastructures, technologies in the financial sector. A digital ledger that keeps a record of peer-to-peer transactions. The recorded data on one block is related to the previous block. The first use of blockchain was related to Bitcoin. However, blockchain technology’s potential applications are not only limited to finance or crypto transactions but other areas,
be it recording medical records,
Real estate records
Voting and many.
Why blockchain is beneficial?
It allows the services to share data in a transparent, secure manner. Thus, blockchain helps in optimizing the processes.
It is changing the B2B and B2C landscape, thus allowing users to meet a transparent, authentic view of personal and business finances.
Payments: Bitcoin has always been viewed as a threat to the control of monetary policies. Every transaction happens peer-to-peer, there rarely arises the need for middlemen. Lately, blockchain is playing as the ‘change’ in the financial sector. Central banks are on rounds to create digital currencies; integrate with blockchain.
Inexpensive: In the case of a fund transfer exchange, the transfer involves low transaction costs, including fast payments. Also, with built-in forms of identification, customers are barred from going through the extra steps like the ones involved in KYC etc.
Accounts: Blockchain, playing as a distributed ledger cuts down the exhaustive costs. Also, the labour required in manual accounting of finance. Adding that keeping a track of records becomes easier. The best thing is its immutability that ensures the authentic nature of blockchain technology. No mishandling of accounts. Hence, everything is recorded.
Identity: It is one of the imperative cornerstones in the finance industry. With consumers, in-house employees, almost everyone indulged in the industry. Blockchain, with built-in cryptographic protection, optimises identification processes. Thus, it ensures security and data protection.
Awards and Investments: In certain start-ups, projects, or ICOs, while collecting funds, the transactions occur in a peer-to-peer manner. In exchange, investors are awarded tokens that carry value.
Less Fraud: Hackers are those hawk-eyed threat actors waiting to exploit any potential data. They can exploit the main servers or other important components of the financial service industry. Yet, many sorts of common attacks are potentially less in the technology.
The use of blockchain in this sector is expansive. Finance is almost a synonym of transparency, identity and transactions. The three crucial traits branded in blockchain’s inception.
How is it disrupting?
Besides performing transactions, there are different areas where it is undergoing experiments.
Defi– It challenges the limitations of Centralised Finance(CeFi), which includes lending, borrowing etc. With the application of stablecoin, anyone can easily lend and borrow money within seconds. Stablecoins are usually pegged to the US dollar. Unlike cryptocurrencies, they are not volatile. Stablecoin develops within the Ethereum blockchain.
Anyone can transfer money without the need for a specific financial system.
The services are secure, cost-effective and efficient.
Instant loans can be provided without any major paperwork.
Defi also enables stock issuance without the need of lawyers or any intermediary.
Decentralised Exchanges (DEXs)
These exchanges allow users to manage their funds with cryptocurrency wallets and smart contracts. Smart contracts automatically match up buyers and sellers.
A marketplace that enables users to exchange goods and services, resembling a traditional marketplace barring any intermediary. Built on the blockchain with smart contract functionality, users can buy and sell NFTs.
All of us well aware of the value transfer system. While performing international transactions, highly expensive and slow at the same time. But blockchain technology gives us a cheaper and faster way. including cutting off the remittance costs at a fraction of what might be as high as 20%. Even though barriers to regulations of cryptocurrencies and security remains, this is one of the promising areas of blockchain application.
Companies implementing Blockchain
While several companies are implementing blockchain in its system. Some of them are:
1. Walmart is incorporating the technology in its day-to-day operations, data tracking and management processes. It is working with IBM in the tracking of meat and poultry products, even implemented a system of tracking information right from the farmer to the retailer.
2. FedEx, a shipping enterprise implementing the technology in settling disputes involving customers, identifies the type of data to store. Thus, storing records for future reference. Data remains ideal for settling customer complaints.
3. Alibaba, the e-commerce enterprise is using blockchain to track luxury goods and enhance cross-border supply chains. The Australian unit of the e-commerce site is also involved in tracking food movement.
4. Tencent, incorporating the technology to enhance legal billing and taxation. The enterprise is exploring further applications in combatting fake invoices, businesses taking advantage of tax drawbacks.
5. Maersk, teaming up with tech giant IBM has launched a platform to monitor the shipping of cargo, record details of shipment from shipping yards to their final destination. TradeLens is the implemented blockchain platform in tracking cargo shipments from one port to the other. Thus, Maersk believes that blockchain has the potential to streamline and enhance the security of international shipping.
Future of blockchain
Blockchain surely can change the world more than anyone can ever imagine. We already got to know the various applications like identity managements, cross-border transactions, Defi, smart contracts, supply chain analysis, tracking and analysis and many. On the other hand, Blockchain technology continues to be a rapidly developing area of growth for businesses in a variety of industries. Blockchain technology may likely be viewed as the most significant invention to emerge from the bitcoin craze. We are yer to discover the full potential of blockchain.
Just how the Internet was a mockery in its initial years, the same way Blockchain is witnessing it. With time we saw how the pandemic has compelled us to rely on the power of the Internet to generate revenue. We don’t know what Blockchain has in store for us. We are yet to discover the full potential of blockchain. We are yet to witness the unknown, but we must remain prepared for it. Till then, we can keep assessing the applications of blockchain technology.
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