Each and every day, countless articles and videos are created to proclaim that blockchain technology is going to change the financial services industry forever. However, these productions rarely delve into any detail about how exactly this new technology can transform the finance sector.
Right the First Time
Every transaction committed to a blockchain is time-stamped to assure its uniqueness, synchronized, and made available to everyone, everywhere in the world. Since each participant always has the latest copy, there’s no need to reconcile accounts. This could eliminate an entire class of accountants and save the financial services industry billions.
These days, many companies have employees in different countries. By switching to blockchain-based cryptocurrency, Human Resources could pay these people more or less instantly and at a lower cost than traditional cross-border payment schemes. Cryptocurrency also eliminates the impact of fluctuating exchange rates, which can be maddening for workers in unstable jurisdictions.
Blockchain technology enables assets to be transferred by simple ledger entry. Every transaction is then “witnessed,” synched and stored on the chain, which eliminates the need for verification by a bank or other third-party. Once the technology matures and receives mass adoption, real-time transfers will be the norm.
Blockchain transactions close very quickly, so there’s less time for someone to hack in and steal money or information. And once a transaction is verified by the decentralised community, it becomes an immutable part of the ledger that can’t be altered unless a malicious actor somehow takes over the entire network. Expectations could be coded into smart contracts that distribute workers’ money as soon as they satisfy your criteria.
In business, it is sometimes best to be sceptical, which is why the financial services industry employs so many lawyers. Someone has to ensure that promises are kept. But blockchain technology can bypass that expense by letting users commit their promises to a decentralized ledger. This makes “smart contracts” as safe or safer than traditional, lawyer-brokered transactions.