Manish Sharma, January 18, 2021
Over the last few decades, there has been an upsurge in the popularity of blockchain technology. a modern technology first uses in the bitcoin application. its popularity in all the industries sector due to security and decentralized features. Due to research proved many benefits of blockchain, banking and enterprises started using blockchain technology with saving billions of dollars for the day by day task such as Clearing and Settlement, Trade finance, Identity, Syndicated loans.
Blockchain is an emerging technology for store data. We can say blockchain is a database which use to store data in form of a block. when a block store the data and filled. move to previous blocks, and create a chain of blocks in chronological order peer-to-peer format. so this is called blockchain technology.
Well, when we do lots of UPI, banking Paytm Transaction and Data is increasing day by day. Storing, Securing, transparency accessing these data problems solved by a technology blockchain without the involvement of 3rd party. which is to reduce the cost of transaction charges.
Blockchain is a system, a decentralized technology that collects records and creates database, tracks records and assets for an individual or collective.
This system is a collection of blocks, carrying substantial amount of information attached to a transaction or movement of assets.
These blocks can be better understood as databases. These databases are subject to high risk if floating in systems without any security. The databases are carrying significant details and the history of the chain. Thus, to guarantee protection, the databases are encrypted by strong and complex algorithms.
The databases are created to form a hassle-free and safe environment for assets and transactions to flow through chains.
Chains are the connection between blocks. These connecting chains in this function are the entities linked to the transaction or asset, as concerned parties.
The blockchain system works on this safely connected network to create a traceable flow. The blockchain applies that fraudulent entries are tagged and flagged by chains to ensure a safer connection to the blocks. Any fallout in the chain can be easily spotted and effectively removed.
This function itself is helping giants like Walmart improve their supply chain management in real-time.
Blockchains were introduced as a backbone to a niche segment of the market. This niche segment has now revolutionized the way we pay or receive money.
Blockchain has helped fellow technology, better known as cryptocurrencies stand strong in markets. The paradigm shifts in the mindset of the masses about keeping cash are quite visible.
Today, keeping cash is costly. The shortcomings of cash transactions are moving the markets to a digital world. This digital world is a den to the blockchain system.
Blockchain is a type of Distributed Ledger. This was originally mastered for Bitcoin, back in 2009, as a tracker for Bitcoin transactions. Distributed Ledger Technology is a system that records, syncs and shares transactions in unique electronic ledgers. These unique ledgers are created in independent computers that are part of the transaction. This eliminates the grouping of data to one single central authority and rather split it to nodes.
Blockchain immunes the cryptocurrencies from counterfeiting. As a decentralized system, it is immensely difficult to collapse the entire system. Every block is encrypted and needs keys to decrypt. There is a public key and a private key. Any individual can decrypt a block with a public key but will strictly need a private key to participate in a transaction. This ensures transparency and security at the same time.
Distributed Ledger Technology/DLT, can single-handedly alter the fundamentals of financial markets and make them effortless, reliable and resilient.
Forecasts swing in favor of blockchain as, banks are ready to have blockchain in commercial commencement and at par, in coming years. The scope for this system is clear, it requires resolving consumer safety issues, financial probity apprehensions, the pace of transactions, environmental impressions, legal, central and technological hiccups that arise with the surfacing of new technology.
There are ways in which Blockchain can refine the current banking and financial sector. Here are a few:
Decentralized confidence: The way blockchain traces a transaction, it removes the scope for a third party or regulatory board, to intervene for validation. This way it creates a sharing foundation for the peers in the chain. Even in the absence of a third party to validate a transaction, blockchain ensures that all the protocols are being implemented and adhered to. This distribution of control leads to a chain of secure transactions.
Increased security: When blockchain removes a central authority, it is realised that now there cannot be a central point of failure in the chain. This is ensured by the use of Unique digital signatures. Running in the chain, participants or mere viewers will need a key to decrypt the blocks. As mentioned above, a private key and a public key will serve different purposes in the decryption of different levels of security. This feature will eliminate the scope of third party security or even approvals from the central authority. Thus, saving a lot of time and effort put in by the traditional ways of securing a transaction.
Diminished costs: The distributed ledger technology disables the authority and need of a third party to ensure safety. Removing a third party saves a sizeable amount of money. This will ease out a lot of transactions and save heavy time on transactions related to trading, settlement and cross-border transfers. When there will not be an outside force attached to a transaction, banks will not have to move assets. Movement of assets needs an additional support infrastructure, implementing blockchain saves heavily on that cost too. Also, banks will not have to spend on compliances like KYC (Know your customer). This all will stand covered under the blockchain.
Amplified efficiency: Distributed ledger technology removes the risk of replication. The elimination of intermediaries will cut down the time for settlements to seconds, and complete transactions to minutes. This allows the transactions to flow all day/night long, making it a non-stop process. Distributed ledger technology will help the banks to store the data in block form using a tamper-proof format. This will reduce the time for settlements to payments as delays caused by replicating the documents has been eliminated. Blockchain will eliminate all nuisances of traditional methods and will add to the efficiency and effectiveness of the banks.
Blockchain is not a simple technology that will spread over in banks in next few weeks. Banks and financial institutions will stand at the stage of experimentation to allow blockchain to reveal its colors bright and clear. There’s always more to the technology that we know about it today, but blockchain stands very promising and eager as a revolution across the industries. Industries will witness the effect of this technology sooner or later, as this is only going forward.