Blockchain refers to a public ledger containing the history of all bitcoin transactions that have ever taken place. The transactions are in a chronological order. Compared to ordinary banking, blockchain is like the history of a bank’s previous transactions.
The technology underlying cryptocurrencies such as bitcoin is known as blockchain technology. It provides a solution to double spending, a major problem associated with cryptocurrency and digital currency. Blockchain technology is associated with a large distributed ledger that keeps a record of all bitcoin transactions. According to Deloitte, blockchain technology is not limited to finance but can be applied in any transaction involving multiple steps where there is a need for traceability and transparency. Examples include land title transfers, secure voting, and welfare distribution.
Global banks are experimenting with blockchain technology in a bid to minimize their expenses. Some of them are opting to build their own in-house solutions while others are partnering with fintech companies. With this trend, blockchain will eventually be accepted by central banks resulting in a widespread use of cryptographically secured currencies.
Spread of Blockchain Technology
Blockchain technology will eventually spread from the financial sector to other areas. It is suggested that the technology will be used in land title transfers, secure voting, movies, music vaccine distribution as well as welfare distribution. In asset transfer, blockchain technology would be useful in the creation of an immutable record that enables you to know where merchandise gets lost on the way.
While blockchain technology is seen as trying to solve huge global problems and inefficiencies, it has the potential of solving daily problems experienced by individual companies or government departments. Although everybody is currently talking about blockchain, this is going to change in the near future as everybody will be using it. Compare how everyone used to talk about the internet in the early 1990s and today when everybody is simply using it with little talk.
Future of Blockchain Technology in Finance
Blockchain technology based solutions will emerge in various segments of the financial services industry. The most successful solutions will increase banks’ efficiencies, reduce costs and attract large networks resulting in widespread benefits.
In many nations, finance could be dominated by bitcoin and cryptocurrencies. As a result, banks may end up as the custodians of cryptographic keys thus regaining their role of financial intermediary. They may end up running a private blockchain resulting in a cartel-like behavior with the effect of negating the gains of cryptocurrency.
Future of Blockchain Technology in Industry
Blockchain is likely to create new industry opportunities while at the same time disrupting existing processes and technologies. It will make the world much smaller and eliminate trusted counterparties resulting in higher speeds and efficiency of transactional activities.
Future of Blockchain Technology in Governments
In future, governments, especially in developing countries, could apply blockchain technology in the distribution of social welfare. The technology will also be applied in elections making the process of voting instantaneous and less expensive.
We recommend that you visit “Shaping Tomorrow” for a more detailed analysis of the future of blockchain technology.