Blockchain is a hot topic across the world right now and there’s a very good reason why tech companies and financial institutions are getting excited about it and the possibilities it presents on a global scale.
Because it’s such a new technology, people are learning as they go, and so writing a definitive guide is near impossible, but, by getting a handle on what the experts are predicting for this game-changing innovation, we can get some idea of what Blockchain is all about.
To summarise it in a few words, Blockchain is a distributed database that manages secure trade. This can apply to both financial transactions, like the exchange of money from one party to another, or non-financial transactions, like the exchange of sensitive documents or records.
So, Blockchain is a digital, decentralised ledger, and a “block”, is the name for a completed transaction.
Because it keeps a fully encrypted record of every transaction (the “chain”) made in the peer-to-peer network, it’s secure too, and this is part of the reason why Blockchain technology is causing such excitement.
The fact that people can transfer almost any kind of asset across the Internet without the need for a centralised third party, such as SWIFT for financial transactions, is where the real innovation lies.
Blockchain began its life as the technology behind Bitcoin and other lesser known cryptocurrencies, presenting a whole new way of working by using software algorithms to record and verify transactions.
Used in the right way, Blockchain technology offers a huge opportunity to financial institutions, and it has caught the attention of the likes of Visa, Goldman Sachs and Bank of America for its overwhelming potential.
It’s companies like these, that have played a part in its design, helping bolster investment in Blockchain in 2016 alone, to $1.4 billion.
> Greater access – Unlike traditional banking, Blockchain technology could make it easier for people to gain access to financial services, like opening a bank account or getting a loan in emerging economies.
> Lower transaction costs – Without the need for any third-party intermediaries, transaction costs are kept lower.
> Better accounting – Blockchain offers a real-time ledger for transactions, making reliable bookkeeping and record verification more straight forward. This also cuts out time needed for corroborating information across various systems and software.
> High quality data – Ledgers on Blockchain are complete, accurate and consistent, so regulators can easily and quickly monitor and verify financial data.
> Speedy transactions – The system is available 24/7, significantly reducing the usual interbank transaction times.
> Transparent and secure – The network is decentralised, meaning there’s no central point of failure, providing extra resilience against attacks. Blockchains are also publicly viewable and locked, so people can’t tamper with the data.
> Cutting out the middleman – This decentralised network means that the power is firmly with the user, allowing direct trade between parties without the need for a middleman.
There’s been a huge amount of hype around Blockchain over the past few years; the potential in the technology is undeniable, and it looks highly likely that banks, financial institutions and other businesses will start implementing it into real solutions.
According to reports from the World Economic Forum, 10% of global GDP will be stored in blockchains by 2027. To put that in context, today, just 0.025% of the world’s GDP is in blockchains.
These figures support the Blockchain hype and show its potential to be huge. As Blockchain technology continues to develop and its potential becomes more widely recognised, experts predict that it will disrupt hundreds of industries that rely on intermediaries, from banking, to real estate, insurance and health care.
This is precisely why major financial institutions and other world-leading businesses are continuing to invest in it, with the aim of playing a leading role in its development and deployment as it becomes part of our day-to-day lives.
The potential benefits Blockchain offers the business world are massive. The technology has already received enormous investment from an impressive portfolio of global businesses, and it is continuing to garner support.
Streamlined transactions, lower costs, better access to payment and financial systems and greater protection against exploitation are all part of what Blockchain can offer.
It has the potential to disrupt and drive innovation in some of the world’s most traditional industries, empowering new users and organisations and expanding the reach of global financial systems.
As Secura’s CTO, Dan is responsible for the team that design, build and maintain our cutting edge cloud hosting infrastructure. He is also the dishwasher police – stack it or else.
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