â€śBlockchain technology continues to redefine not only how the exchange sector operates, but the global financial economy as a whole.â€? â€“ Bob Greifeld, Chief Executive of NASDAQ
Everyone is talking about blockchain, the new technology in the FinTech Industry. The concept of blockchain has energized the financial services industry globally. The concept has already brought a disruption in the financial industry.
What is blockchain?
A blockchain is a public ledger of all bitcoin transactions that have ever been executed. A block is the â€ścurrentâ€? part of a blockchain which records some or all of the recent transactions, and once completed, goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. Blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block.
To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Meanwhile, blocks, are like individual bank statements. The full copy of the blockchain has records of every bitcoin transaction ever executed. It can thus provide insight about facts like how much value belonged to a particular address at any point in the past, thus allowing for more innovation.
To give an example of the blockchain concept, IBM Blockchain has joined The Linux Foundation's Hyperledger Project to evolve and improve upon earlier forms of blockchain. Instead of having a blockchain that is reliant on the exchange of cryptocurrencies with anonymous users on a public network (e.g. Bitcoin), a blockchain for business provides a permissioned network, with known identities, without the need for cryptocurrencies.
Benefits of blockchain technology
- As a public ledger system, blockchain records and validate each and every transaction made, which makes it secure and reliable.
- All the transactions made are authorized by miners, which makes the transactions immutable and shields it from the threat of hacking.
- Blockchain technology discards the need of any third-party or central authority for peer-to-peer transactions.
Blockchain: The new innovation for financial services
Blockchain has been one of the most awe-inspiring innovations since the Internet came into existence. Blockchain technology basically allows everyone to hold and make transactions as strangers but in a completely transparent manner. There is no mediator in between two people making the transaction, and the entire process becomes easier and cheaper. This concept can be applied to the entire digital world making any kind of exchange/transactions secure (and not just bitcoin). This article will take you through numerous such business models and companies that are beginning to sprout based on blockchain tech.
What are blockchain use cases and initiatives taken by financial services industry?
Blockchain technology allows everyone to hold and make transactions as strangers but in a completely transparent manner. There is no mediator in between two people making the transaction, and the entire process becomes easier and cheaper. This concept can be applied to the entire digital world, making any kind of exchange/transactions secure.
Interest in blockchain has been coming in from every corner of the world with major ones being banks and technology providers. Banksâ€™ interest in bitcoin blockchain is seeing a huge uptick with the exploration of potential use cases for the distributed ledger system (blockchain technology).
Blockchain technology has been acknowledged as one of the most disruptive innovations since the advent of the Internet. The financial industry has also started looking to leverage it to store and transfer its value to other financial instruments. Capital Markets is one such industry in the financial space where industry experts are optimistic about the use of blockchain technology.