Blockchain technology provides a digital platform allowing fast and secure transactions between both the sender and the receiver using a virtual currency, known as cryptocurrency. Bitcoin is the most used cryptocurrency today, and banks like Goldman Sachs, USAA, Simple Bank, Ally Bank etc. have already adopted bitcoin as their payment platform for making transactions. According to the
genuine crypto news and popular banking blogs, blockchain can shape the future of the banking industry, since banks are suffering from fraud and privacy issues. Almost all banks that have adopted cryptocurrency comes from the USA, and this country is considered to be the most crypto-friendly country.
Blockchain Technology Decoded
Blockchain is the underlying technology behind cryptocurrency. It provides the security to the cryptocurrency by using the concept of cryptography and decentralization, meaning that it will eliminate any central authority for management and monitoring process. Blockchain technology is a distributed network containing a number of computers with a peer-to-peer connection. The word “block” describes the data block containing the transaction and personal details of customer and “chain” refers to cryptography technology which makes the transaction secure from fraud.
Reasons Blockchain Can Shape The Future
There are several reasons why blockchain can shape the future of banks. Some international banks have already adopted the blockchain as their mainstream technology. Blockchain provides a digital platform for exchange for making transactions secure using cryptocurrency. Beyond that, there are several reasons for making blockchain technology as a mainstream technology.
1 Reduced Fraud
Blockchain can work as hack-proof technology, making it secure from cyber crimes and distributed denial-of-service (DDoS) attack. It also provides banks’ customers with a blockchain-enabled digital ID to identify quickly and accurately. The decrease in fraud will result in a reduction of business expenses and make banks run more efficiently.
2 Details of Transaction
Blockchain is a very efficient technology to monitor transactions. The transaction details contain two parts:-
1. Title - Since it is challenging to tamper ledgers, ownership can be tracked very efficiently and effectively. Every ownership transfers will be recorded in a ledger, that will lead to a trustworthy source of information. This source of information applies to any ownership type.
2. Smart Contracts - They are used to monitor the data between both buyer and seller. Smart Contracts are also capable of monitoring the problems that may arise during the transaction with much accuracy and speed. They can automate the monitoring activities of a transaction process.
3 Facilitating Money Transfers
People have to send and receive their funds across the globe and banks are implementing blockchain technology for this. There are billion-dollar transactions made worldwide every year, and they are generally expensive and slow. Cryptocurrency can be just another way to move funds from one country to another. Bank’s customer can get fast and efficient service with blockchain technology. For example, if an employee is working in the USA and wants to send funds to his home, which is in another country, he or she may have to first travel to money transfer office, follow a crowd and pay more than 5% fee for completing the transaction. The receiver will also do the same thing. The blockchain technology will benefit both parties by performing digital exchange of funds through their phones, which is almost free of cost.
4 Cutting The Transactions Expense
The traditional methods of transferring funds are generally expensive, which include swipe fees. Moreover, the bouncing of checks can cause a substantial monetary loss to the merchant. Sometimes, an electronic-based system may fail to monitor accounts from the customer side. The blockchain-based payment system may solve this issue by lessening the transaction fees and completing the transactions in a minute.
5 Financial Inclusion
Blockchain-based technology may boost financial inclusion by bringing large banks and startups in competition. It can provide solutions to those people who don’t want to high transfer fees, lack of access to the banks and formality of minimum bank balance requirements. In some cases, banks can be not much accurate in identifying their customers. Blockchain technology provides digital ID’s making it easier to identify their customers accurately.
Conclusion
Finally, we can say that banks are now accepting the blockchain-enabled technology for making payments more secure and quick. The
blockchain analysis reveals that more banks will adopt this technology and blockchain can shape the future of the banking industry as it is a fast and secure medium of transaction. People from the blockchain industry are doing more research as it is a very new technology, and it will change the future of payment within a few upcoming years.