The Impact of Blockchain Technology on the Finance Industry

 Blockchain Technology in the Finance Industry

Blockchain Technology is transforming the way of operating financial institutions and interaction with customers. This technology has become very popular in finance industry in previous few years and also it's impact is very significant. In this blog we will try to understand about Blockchain in Finance and it's impact on this industry. 

Let's begin with first question that What is Blockchain technology according to Finance industry? Blockchain technology in finance is a non-owned government and distributed ledger system which allows secure and transparent financial transactions without any intermediaries like banks, clearinghouses, or other financial institutions. It also helps in creation, transfer and tracking of digital assets and cryptocurrencies. It operates on network of computers and added to a block, after that this block is added to chain of blocks. This creates a secure and transparent transaction that have occurred in blockchain.

Blockchain technology can be used for multiple purposes like international payments, digital Identity verification, trade finance, and capital markets. One of the major benefit of blockchain in finance industry is its ability to reduce cost and increase efficiency by removing intermediaries and make some financial process automatic. 

Impacts of Blockchain Technology in Finance

Blockchain technology's impact in finance industry in significant, it is removing traditional methods which are time consuming and more risky too as compare to blockchain technology. Some of the major impacts are :- 

1. Decentralization : As we discuss earlier that it is non-owned government and distributed ledger system that eliminates intermediaries. Previously transactions need some one but by this technology you don't need any one you can do transaction with your own device, which reduce extra costs and increase efficiency. 

2. Security : Blockchain is tamper-proof and transparent, means your transaction will not be tampered in the middle and it will transparently reach to the receiver. Also, this technology makes transaction very secure so, there is no fear of loosing financial information that is not good news for hackers and other forms of cybercriminals. This technology reduce the risk of fraud and money laundering.

3. Speed : Blockchain technology makes transaction faster as compare to traditional methods. It reduce settle time and improve flow of cash. This is specifically benefited to international transactions which can be completed in minutes rather than days. 

4. Lower costs : In traditional methods, transaction needs intermediaries which also charge some cost but this technology reduces these intermediaries and their costs which makes transactions more cost effective. This is particularly important for small businesses and individuals. 

5. Transparency : This technology makes transactions transparent so that no one can tamper in between if some one tries to tamper it will be detected. It also enhances the regulatory obedience by providing complete audit trail of all transactions.

In addition , blockchain technology can be used for trade finance by automating the processing of trade documents and reducing the risk of fraud. 

Conclusion 

Overall, blockchain technology has the potential to transform the way financial transactions are processed and conducted. It also increase efficiency, reduce costs, and provide more security and transparency. As blockchain technology continues to evolve, it makes sure that it will become very important part of finance industry.