Good day fellow steemians and welcome to my blog on how blockchain has benefited financial sectors.
Of all technologies that have surfaced in the financial sector in the recent years, blockchain has proved itself to be the most promising one as it powers decentralized cryptocurrencies and in which the most popular and finest cryptocurrency that has ever came into existence is Bitcoin, which was invented in the year 2009.
What is Cryptocurrency?
Cryptocurrency is a digital currency or asset designed to work as a medium of exchange which uses encryption techniques to regulate the generation of units of currency, secure financial transactions, verify the transfer of funds and control of additional units.
What is Bitcoin?
Bitcoin is a form of electronic cash sent from peer to peer without the need for the use of a financial intermediary that is, it works without a central bank or an administrator.
It is the world’s first cryptocurrency and also the first decentralized digital currency.
What is Blockchain?
A blockchain is a continuous growing list of records called blocks, they are linked, secured and verified using cryptography and in which each block consists of a cryptographic harsh of the former block, transaction data and a timestamp.
Blockchain consists of numerous technologies that works together to create a ledger of records arranged in data objects called blocks, they are linked together through the process of encryption and these block provides a framework for digital currencies (bitcoin for example) to conduct a secure online transaction.
After checking out the above analysis, few out of numerous positive impacts and benefits enjoyed by financial sectors due to the advent and development of blockchain technology will be discussed below and they includes-:
Blockchain despite being a new technology has helped in reducing the level of fraud if not completely eradicating it. This is one of the major benefit or impact of blockchain on financial sectors.
It’s ability to reduce fraud has gained a lot of attention, most banking systems are tending to cyberattacks because they are built on a centralized database which makes it more vulnerable.
However, blockchain as mentioned in the above analysis, is a distributed ledger in which each block has a timestamp and list of individual transactions are kept with a link to a former block and in which this has greatly helped in reducing fraud in financial sectors.
Enhances payments and clearance-:
Blockchain has assists several financial institutions in improving their payments and clearance, it has made it possible for them to eradicate specific elements of distrust in their transactions (especially the middlemen) and in which this has made clearing process easier and faster, thereby changing the role of intermediaries.
As blockchain helps users to introduce a wide range of approved mechanism, it’s also assist in varieties of transaction such as wire transfer from one person to another, escrow arrangement and so on.
This is another impact or benefit of blockchain on financial sectors. Blockchain makes it possible to efficiently transfer value hence, causes shift in the flow of capital.
The greatest impact of blockchain on capital market is on crowdfunding. The rise of the former coin offerings has provided a unique method of funding projects and has also created new and unique financial instruments.
Apart from the above mentioned and discussed impacts or benefits, there are still numerous impacts or benefits that are yet to be mentioned such as increase in nation’s currency, trading of derivatives, enhances the operation of insurance sectors and so on and in which all these impacts or benefits proves the immeasurable merits enjoyed by financials sectors due to the advent and development of blockchain.
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