7 Reasons Why Blockchain Will Explode Next Year
Blockchain is the form of technology and data structure that underlies the digital currency, Bitcoin. It is the capability to conduct transactions without a trusted third party and originated in early 2008. In other words, it is a large ledger that keeps a record of Bitcoin transactions.
As financial institutions and corporates face enlargening challenges in data management, regulation and security, Blockchain has begun to emerge as the solution to verify transactions on a central network that excludes authority.
1. Better Regulation
Banking regulations have hindered the activities of European and American financial institutions since their rise to dominance. Blockchain acts with no trusted third party and therefore provides a more efficient process than investment bankers can suggest. Regulators are demonstrating an enlargening interest in the activities of blockchain businesses and can provide real-time monitoring and financial advisory.
Since the introduction of BitLicenses, two have been awarded to Ripple Labs and Circle Internet Financial. This could also provide benefits to compliance departments as blockchain draws upon many data sources.
Two. Fraud Minimisation (or should do)
Blockchain is expected to minimise the likelihood of fraud across transactions, as the process eliminates the third party thereby reducing counterparty risk. Agreements are codified and collective in an unalterable environment which ensures that it is substantially more challenging for hackers to come in the system. Consequently, blockchain has been praised for its assured security. Therefore, a growing number of financial institutions and corporates are looking into Blockchain after the security breaches seen in two thousand sixteen exposed the potential limitations of previous methods. JP Morgan Pursue last year had eighty three million accounts compromised. However, given that the data entered is of the highest security, one could argue that if hackers were to be successful, they would obtain vast amounts of confidential information.
Blockchain eliminates the manual processes that are required to perform reconciliation and to resolve disputes. This is hugely advantageous to trade financing but could see the number of traders diminished. Blockchain conversely could lead to a significant number of job reduction.
Four. Blockchain Start-Ups
There has been a acute increase in the number of start-ups, notably in Silicon Valley, that are innovating fresh applications for the blockchain technology. Venture capitalists have invested substantial sums in these corporates. This investment has led to an increase in 2nd and 3rd generation applications. On Wednesday, Blockchain technology company Factcom said that it had secured $Four.2m in financing from global investors, led by Tim Draper.
Five. Central Banks And Governments
Blockchain has forty experimental users that are key financial institutions, and many companies are progressing towards the transfer to securely manage the ownership of assets without the threat of fraud. The UK Government are earnestly considering implementing the digital archive for their transactions.
6. Enhanced Liquidity
The technology archive condenses locked-in capital and offers transparency into locating liquidity for assets. Therefore blockchain provides opportunities for asset allocation enabling improved risk evaluation and decision-making. JP Morgan and PwC have both recommended blockchain as an “opportunity” for asset managers.
7. Shorter Times
Blockchain enables the near-real-time direct transfer of funds inbetween financial institutions by removing obstacles and accelerating clearing.
The World Economic Forum detailed that Blockchain technology will become “the striking heart of finance” due to its simpleness and efficiency. One day, this technology could substitute the need for banks altogether.