Effective Ways In Which The Blockchain Technology Has Improved The Financial System #003

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Hello great minds,

It is another beautiful day and I am happy to be here in our community today to discuss again on some improvement we have in our financial sector due to the evolvement of the blockchain technology.

In our last discussion, we learnt about some ways in which the financial Industry has been improved by the blockchain technology.

Please join me as I begin this explanation

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ENABLES PEER TO PEER LENDING PLATFORM

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The blockchain plays a huge role in improving the financial system through the enabling of peer to peer lending platform.

Peer-to-peer lending can be explained to be the process whereby individual or group of individuals directly lend money to an individual or group of individuals without the intervention of an intermediary such as the traditional banks.

The decentralized nature of the blockchain helps to ensure that all loan activity and transaction are stored on the blockchain.

All transactions recorded on the blockchain ledger are then open for all to see and verify, and this is possible through the transparent nature of the blockchain.

Once this loan transactions are recorded on the blockchain, it becomes immutable and cannot be deleted/altered, thus minimizing the risk of any fraudulent activity.

With the use of the traditional lending platforms, users are required to excercise trust in a centralized authority with their sensitive information.

However, with the use of blockchain technology, an advanced cryptographic technique is employed which helps to secure data, reduce the risk of unauthorized access and the risk of data breaches.

Here users are given control over their keys, thus providing an added security layer.

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FACILITATES MICROFINANCE INITIATIVE

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The blockchain plays an important role in facilitating microfinance initiatives. The blockchain is an immutable ledger that helps to store all transactions in a tamper-proof and transparent manner.

The transparency of the blockchain contributes to developing trusts amongst every member involved in the microfinance initiatives, which includes the regulatory bodies, the lender and the borrower.

In the traditional financial system, the operation of an intermediary is often needed which often leads to an increase in the cost of transactions.

However, with the use of blockchain technology, the need for a middleman is eliminated, hereby reducing transaction costs and making microfinance activities cheaper for both borrower and lenders.

With the use of blockchain technology, microfinance transactions are very fast, the blockchain aids transaction across borders at a faster rate.

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ENABLE REMITTANCES WITH LOWER FEES

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The blockchain technology plays a huge role in developing the financial sector specifically in the realm of remittances by offering several services that leads to a more efficient and the reduction of fees.

The blockchain technology facilitates a direct peer to peer transactions, thus eliminating the need for a middleman, hereby reducing transaction costs across all transactions.

The blockchain also operates as a decentralized system, thus eliminating the control of a central authority, here by reducing unnecessary cost that might be taken by the administrative panel.

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CONCLUSION

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We have explained ways in which the blockchain has improved the financial system and there is more for us to learn and we shall learn them as time goes by.