Blockchain technology is one of the many latest technologies that are rising in popularity. I first learned of blockchain technology through a documentary that I watched on my Spectrum TV app.
It is a fascinating technology that rewires the Internet. It is used to create a network that uses simple procedures and allows people to carry out safer transactions through a decentralized public/private ledger.
Also, Read: What is Blockchain? What Makes it so Safe?
Understanding the Concept of Blockchain
Blockchain is actually a chain of blocks where the block is the digital information and the chain is a database where information is stored. The database can be public or private.
Blockchain has gained popularity as the Distributed Ledger Technology DLT. This technology is commonly used by businesses of the modern world to store their data in a safer and paperless form.
Blockchain also allows businesses to save money and helps streamline their business operations and supply chain processes by introducing transparency in the system.
Moreover, this technology generates secure real-time communication networks for businesses and helps parties across the world to connect and handle transactions in a secure environment.
7 Ways Blockchain Is Transforming Finance
Blockchain has improved the finance industry in more ways than one. Here are some of the key aspects of financing that have been improved using this technology.
#1. Safer Tracking
Businesses industries such as pharmaceuticals, luxury branded goods, cosmetics, electronics that offer products and services are often vulnerable to various crimes like counterfeiting or theft, etc.
Blockchain technology can help businesses reduce the risks of such financial issues by generating records of each step in the manufacturing or ship processes.
This allows the retailer to track the entire journey of a product from start to end and verify its authenticity.
#2. Securing Global Payments
Global transactions often entail hefty transaction fees. Using smart contacts and blockchain technology, the process of global transactions can be made cheaper.
This is done by reducing the number of people that are required to manage or complete a global transaction.
#3. Organizational Data
Most businesses typically have to carry out financial dealings with retailers, suppliers, vendors, and other companies, in addition to their internal financial transactions.
All these things are part of a supply chain and they need the right information to perform well. Blockchain technology has made this process much more efficient by introducing transparency.
Transparency is made possible by sharing relevant financial information with all concerned parties in the form of blockchain records.
#4. Global Trading Made Easier
Global trade is complicated as the exporters and importers require verifications of transactions before they can complete a trade.
This process is sped up by providing relevant documentation and records to all concerned personnel through blockchain technology.
#5. Safekeeping Bonds
The security of bonds can be improved by implementing regulations in the transactional process using blockchain technology. For instance, a blockchain can be created when a bond is issued by a bank.
Any changes made to the capital can be linked to the chain. This would allow the system to send alerts to the bank and involved regulatory authorities if any alterations occur.
#6. Automated Auditing & Compliance
Blockchain technology can also improve the auditing process for businesses. If companies allow access to their data to auditors through blockchain technology, the auditors can scrutinize every transaction and create automated reports.
#7. Safer Equity Post Trade
The process of communication between buyers and sellers where the information about the change of ownership records and trades is exchanged is commonly known as the equity post-trade.
This process can also be improved using blockchain technology. This tech could help eliminate intermediaries from the process thereby minimizing the risks.
Blockchain technology will undoubtedly continue to improve the world of finance in several aspects. This technology has the potential to change the way financial companies carry out their business operations.
Many people across the world are continuously studying and researching this technology to gauge its impact on the safety, security, profit, and productivity, etc. of businesses that use this tech.