Starting in the year 2009, Blockchain technology works with a varying perception which adopts a modern outlook in the financial system. Blockchain technology revolutionized the entire financial system of the world. The changes it brought made the world adapt to it. From its production to its distribution, the outlook of the financial system changed in a very positive system with blockchain technology. The transparency with which it works has created a popular impact on the common masses. The following article will concentrate on how blockchain technology revolutionized the global financial system with its coming.
The changes brought out by Blockchain technology
- Decentralization: The decentralized characteristic of blockchain technology made it one of the popular forms of digital money. There is no involvement of third-party institutions like banks or financial institutions in the transaction of the digital currency which proves the transparency with which it works. It also made the system and transactions easier for people with no bank accounts. Being one of the popular forms of digital assets, it becomes more appealing to people because of its decentralized way of working.
- As an efficient method to close the loopholes in the current financial system: This tamper-free online ledger not only provides transparency to its users but also increases the possibilities of experimentation in the financial sector. The ‘smart contracts’ technology used in blockchain to record all the transactions has got the potential to eliminate the system of transaction charges, which in turn creates more convenience for the people. Cryptocurrency ETFs (Exchange-traded funds) are a modern way where users can be saved from large sums of transaction charges.
- Highly secured with cryptographic security: Blockchain is one of the most highly encrypted and secured systems in the world. Every crypto user is occupied with two keys; public and private cryptographic keys. The private one is for writing ‘access’ and the public one is for verifying the details of the requestor. Since it is an online portal, the possibility of hacking is there. But the double-encrypted security used in blockchain technology makes it impossible for hackers to hack the data.
- Smart Contracts: Smart contracts encode all the commercial and regulatory rules that are surely needed to be enforced for all blockchain transactions. Once a transaction is initiated it triggers all the nodes where all conditions are met.
- The growing dependency of stock markets on Blockchain technology: The stock market is a bigger and more complex phenomenon that is growing each day. The main problem associated with the stock market is its transaction time and operational costs. Because of these reasons the possibilities of immediate settlements and automated compliance offered by blockchain technology have been widely explored by the Stock Market exchanges and their associated fields. Another effect blockchain created on the stock market is the democratization of trading. With this entry, the price is lowered and thereby making the exchange servers irrelevant.
- Simplifying the banking payments: The high transaction fees charged by banks to users make it harder for the common people to keep up with the high transaction charges. With the decentralized ledger of blockchain technology, the payments in retail banks can be reduced and simplified.
- The growing accuracy in asset management: The use of intermediaries in the system of asset management makes the process complex and time-consuming. With the blockchain, direct trading and settlements across boundaries can be enabled which lowers the costs and increases the data accuracy and also in lowering the delays.
- Reduced risk of fraudsters: Blockchain technology is something that cannot be tampered with. The reduced risks of fraudsters are something that makes it more appealing to the people along with the transparency with which it works. A user in a blockchain network didn’t have any authority to make changes or tamper with the data without others in the network knowing.
9. Governmental regulations: Government agencies views blockchain with a positive outlook. Because they see cryptocurrencies as a valuable digital assets. The current regulations of the government are by far yet positive. But when people begin to exploit the situation the possibility of imposing strict regulations is still out there.