We Have Faith in Blockchain: Blockchain and the Book of Banks
By the beginning of 2018, a variety of financial institutions from all over the world have invested time, money, and resources in learning everything there is to know about blockchain. The message is being sent in all ways, and only the most oblivious have failed to comprehend the magnitude of the changes that technology is about to bring.
The Relationship Between Banks and Blockchain: What It Looks Like
The game continues to be as clever as it has always been. Whoever arrives first gains the most of everything: trust, large data, clients, and, most crucially, profit. It's all about the cash.
For obvious reasons, before humanity can even consider entering the crypto-currency world and embracing a new era of existence characterised by peer-to-peer relationships, banks must do everything possible to prevent it.
Rather than succumbing to blockchain technology, the system is attempting to keep up with it and embrace (read: devour) it for their own gain.
In Finance-Use Cases, Know Your Enemy, or Blockchain
When we discuss how technology is being interwoven into our daily lives, we are referring to how it is changing the traditional financial services industry. The relationship is self-evident. Blockchain was first introduced by cryptocurrency, and for a long time, distributed ledger technology and blockchain, in particular, were solely associated with Bitcoin.
Despite this, blockchain exists outside of Bitcoin and is already powering a variety of enterprises. Financial institutions, on the other hand, appear to be more enthusiastic about blockchain than anyone else. There appears to be a rationale behind the fascination.
Knowing the advantages and disadvantages of the banking business, distributed ledger technology provides a solution to the problems we all have with the existing state of affairs. The new system is similar to what we could only imagine:
decentralisation (when not adopted by a particular bank, of course)
secure
immutable
fast
cost-effective
While these characteristics go counter to traditional banking in some ways, blockchain financial services do exist. Banks have already begun to use blockchain in order to prevent cryptocurrencies from becoming the new bank. Banks are coming up with different ideas that have already been launched and tried as they research where to pioneer in order to get the most out of the market.
Financial Services Impact
The conclusions must be based on facts, which are available as of early 2018.
Governments have begun developing national crypto-currencies based on blockchain technology.
Banks have banded together on the blockchain platform to transact with one another in a more efficient, cost-effective, and risk-free manner.
Several blockchain-based services have been used by financial institutions to minimise the cost and risk for their consumers.
In the fields of reference data and trade finance, banks have experimented with blockchain solutions.
At the same time, several major banks have banned credit card transactions including cryptocurrency exchange purchases.
Banks are adopting blockchain while prohibiting cryptocurrencies, which appears to be an arranged marriage to avoid a conflict of interest.
Use Cases for Blockchain in Trade Finance
When you think about it, blockchain-based banking is a bit of an oxymoron: a system that was designed to be decentralised is now being used by a system that is centralised to the core.
With more people using it, blockchain might become a universal safety safeguard for modern internet- and technology-based commercial partnerships, potentially removing banks as a middleman. It's no surprise that the traditional banking industry is eager to use blockchain.
There's absolutely no reason not to adopt this concept because it's so different from what the rest of the world is used to.
Here are some instances of blockchain technology in finance before we go any further.
If you're wondering why the big companies are investing in, here's why:
It has never been possible to rely exclusively on technology and not alter data.
The inclusion of blockchain in money transfers eliminates the authenticity problem, which is especially important when dealing with large sums of money, allowing distributed ledger technology to leap ahead of traditional financial institutions.
Blockchain payments can provide an assurance that digital data is not subject to cybercrime, something that institutions are presently unable to do on their own.
Instead of relying on a specific financial institution as a mediator, smart contracts allow you to rely on a mathematical formula that always works.
Smart contracts also act as a non-bribable third party, ensuring much-needed openness and accountability.
Governments are backing blockchain technology.
It is on to governments to convince their citizens of the distributed ledger's power, particularly in the financial industry, if this technology is to become widely adopted. Several concepts were brought to reality in 2018. Here are a few examples of what blockchain has accomplished in government.
Estonia was one of the first countries to integrate blockchain into its administration, focusing on cyber-security. e-Law, e-Court, and e-Police are systems that are powered by KSI, a blockchain technology that prevents even the government from tampering with data. The next phase is e-voting, which is now being prepared.
Dubai's government is aggressively investigating blockchain technology, with the goal of running the government on blockchain services by 2020. Healthcare, trade finance, the diamond trade, tourism, and ownership transfers are among the areas that will be digitised. Furthermore, the government has already established emCash, its own cryptocurrency.
Sweden is experimenting with a blockchain-powered land registry that will allow land purchasers and sellers, their banks, and land registry authorities to examine and approve transactions in real time, reducing paperwork.
Banking Smart Contracts
People appreciate learning about distributed ledger technology because it helps them to break free from old (or not so old) habits and explore new possibilities.
In general, technology is as good as it gets nowadays. The following propositions would be true in a world where the financial system implemented self-executing contracts:
Improved transparency would make banking more trustworthy.
Both banks and their clients' risks would be greatly reduced.
Because of the reduced paperwork, the banking procedure would be sped up.
Real-time transfers would take place.
Costs would be reduced.
Applications
Financial organisations can improve numerous parts of their services simply by allowing self-executing contracts to work with shared access to specific sorts of data:
KYC
Preventing money laundering is a time-consuming task. The goal is well-defined, as are the efforts made to achieve it. Blockchain-based solutions have the potential to save banks a lot of money while also saving their customers time.
Mortgages
Save that money once more. The current system is far too complicated to be quick. Verifying massive amounts of data from all parties involved takes a long time and costs more than is desired.
Insurance
Insurance becomes more secure, transparent, and accurate when it is powered.
Despite the large number of institutions that have already integrated the technology by 2018, blockchain financial services/use cases have yet to be completely explored, and the possibilities are nearly limitless: transactions are everywhere, and only half of the seats have been filled.
The following were the most common blockchain applications in 2017:
Is DLT the Way of the Future?
It's important to remember that the concept of a blockchain-based world is a type of faith. The more people who believe it to be true, the more true it is. Since we're dealing with money, the more authentic it is, the more money you can make.
It's been ten years since the distributed ledger technology seed was planted, and now we're figuring out what to do with the fruits: rapidly unravelling the intricacy of blockchain-based technology.
Blockchain is a new type of technology.
Bitcoin, along with blockchain, has transformed the way people think about money the most. If we are daring enough to see and use the breakthroughs afforded by modern technology, this new idea of money will logically appear alongside a new idea of how it will function.
There are people who speculate on the concept, waiting for the change to happen, and those who are actively engaged in changing the course of its development process, as there are with all great concepts.
You are contributing to the existence of blockchain on the level of information simply by reading this.