Want to know what is Blockchain technology? Blockchain, in layman language, is just a chain of blocks, but not in the traditional sense. When we use the word Blockchain, we are talking about digital information stored in a public database in a secure and protected way. Blocks on the Blockchain are made up of digital pieces of information stored in encrypted form.
There are three parts:
- Blocks on the Blockchain store information about transactions like time, date, and the amount of your most recent purchase from any online shopping site such as Amazon, Walmart, etc.
- Blocks on the Blockchain store information about the participant involved in the transaction.
- These blocks store information that separates them from other blocks, much like you and I have names to distinguish us from one another. Each block on the Blockchain stores a unique code called a “hash” that allows us to identify it apart from other blocks.
How Blockchain is Different from Traditional Technologies?
To help you learn how blockchain is different from traditional technologies, we have listed down some of the points:
- Let us take an example to help you understand the difference in a better way: In the case of traditional technologies, it is difficult to trust the raw material available in the inventory unless you know the inventory manager. This is not a case with Blockchain technology. Multiple nodes maintain all Blockchain-based ledgers.
- The Blockchain technology is an open distributed ledger yet a private system due to encryption. This point about confidentiality is one of the major points that make Blockchain technology different from traditional technologies.
- Blockchain technology, when incorporated in the data process, removes even the single point of failure. In this case, traditional technologies ensure that if one of the participants changes something, it gets immediately corrected by other participants.
How Blockchain Impacts The World Of Financial Services?
Let’s see how Blockchain impacts the world of financial services. Look below:
- Blockchain technology makes international payments safer and faster. Even some banks have started the movement of money internationally through the use of Blockchain technology.
- Blockchain technology comes with Smart Contracts that allows the automatic execution of commercial agreements and transactions.
- Blockchain offers a wide range of features and one of those features is a better mode of payment.
- The insurance sector will change entirely with Blockchain technology. From payments to claiming insurance and investigations of the claims, everything will be easier.
- Smart contract let commercial agreements and transactions to be executed automatically and, in that way, reduce the cost of transactions.
- The main important feature of blockchain in financial services is eliminating fraud. It is very difficult to attack blockchain by hackers and cyber-attacks.
- With blockchain technology widely adopted, every customer can be verified independently (KYC), and the identity of a customer can be availed to other financial institutions since the customer has already been confirmed on the blockchain network.
Blockchain is a potential technology that will dominate the world of financial services in the future. With the growing number of banking transaction carried out on daily basis, blockchain can fill the gap of security, transparency and fraud. Blockchain will develop more faith in the customers as everything was done in fast mode with full proof security.
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