BlockChain Technology is already changing the World. We can see the example of Cryptocurrencies which are growing rapidly and giving us applications to make our lives easy and convenient. BlockChain technology is not limited to cyyptocurrencies only, instead it can spread over financial system as well as making it more efficient, effective and economical. Some Tech and Finance Giants like JPMorgan Chase and Citi group already considering the use of BlockChain technology in their day to day operations.
Let's understand this topic in details.
What is BlockChain?
I would like explain this terminology in simple words.
BlockChain is a technology which creates a decentralized public records of transactions. These transaction remains secure, anonymous, hassle free and most of all unchangeable. That means, something once recorded on the Blockchain always remains on it.
Example: Whenever a person transact something on Blockchain, a new block creates and the submitted into the already built chain which is recording transactions consistently. If Brain wants to send some money to Dom via blockchain technology, then a transaction record will generate which will be added to the Blockchain network, which can be seen anytime publicly.
The main highlight of blockchain technology is that, it diminishes the presence of Intermediary while conducting a transaction.
Now Let's understand our existing Banking and Financial Industry and How it works?
Our current banking and financial industry work as an Intermediary to all the transactions ever done by anyone. Banking exists to intermediate the transactions and trade between people, business and corporations.
Let's suppose: Jim wants to send some money to Jude. How will he get this done?
Simple, he will go to the internet banking website or mobile wallet application of the respected bank he has an account with, He will simply add details of the person he wants to transfer money and with a single click, its done. So, what banks did was to intermediate a transaction between Jim and Jude. Without a bank or wallet application, or should I say an intermediary, the transactions were not possible.
In the same way our Financial Industry work. If a person needs a loan, then he'll go to the financial Institutions like HDFC Financial solutions and present them their documents and if everything is in accordance, a transaction will conclude between Financial Institution and that person. But still that Financial Institution still worked as an intermediary to conduct the transaction and hold the records of that transaction in their own servers.
The Problem with Intermediaries is that they hold all the public and private records of transaction and they charge a hefty amount for the same. What if their server got crashed? What if someone hack their servers and steals all your information?
Yes, It can happen. The transactions on banking servers are changeable and can be modified at will. Plus there are no public records available for those transactions. This is a drawback which BlockChain is going to solve.
How BlockChain Will Help In Changing The Finance Industry?
Blockchain technology will simply help Banks and Financial Industry to reduce their cost of intermediating the transactions as well as the fees they charge from their customers will also be reduced plus all the information or transactions records will be publicly available with out any hassle, security issue and the main thing is that it'll be unchangeable. Think about the money we have to pay regularly on our daily transactions. Think about the time we waste by visiting financial institutions for our menial to large transactions.
The problem which Blockchain solves is the problem of centralization. Centralization systems are more prone to attacks and security issue. All the power rests in the hands of an individual instead of public. Blockchain works on the basis of decentralization system. It creates the public records of all the transactions and add those records on the live chain where that information will be stored kind of forever and one can easily review it whenever a need arise to confirm its genuinity.
Blockchain is going to be huge in the near future and various Financial giants are trying to implement it within their existing systems. These financial giants includes some renowned names like JPMorgan Chase, Goldman Sachs, Citi group and many more.
Let's hope, in near future we'll get a hassle free, secured and an economical medium of transactions.
Thanks for reading ..!!
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