The concept of the internet was a start of the new era on the 1990s and now this new technology "Blockchain" seems to be the same. Blockchain will exactly play the same role in financial sector what internet played in information technology. This new technology is promising enough to make a difference what we think about monetary transactions. The blockchain is a digital ledger of currency transaction that is programmed to record everything of value. By Design, Blockchain technology is decentralized which means any transaction executed is managed by its network not by any central point.
The blockchain is used in cryptocurrency so as to ensure a peer to peer connection platform. Cryptocurrency is a digital currency or we can say digital monetary unit to which blockchain provide advanced encryption techniques. Back in 2008, Blockchain was introduced as a piece of the proposal with the giant digital currency “Bitcoin”. Hence Bitcoin cryptocurrencies are the application of Blockchain technology. The currency which isn’t using this technology till now also have plans to switch, as many of you must have heard about altcoins like EOS, TRX etc.
How Blockchain works
Blockchain provides an additional layer of security to transactions. It’s a connection of records called blocks which are linked and secured using cryptography. Information is stored in these blocks which are shared by everyone connected to the network. These block stores all the information of all the transactions with past details of its usage which is available for public access. There is no need for a central point to manage or approve the transactions and so it eliminates the risk with peer to peer data information transmission.
Another most important fact I got to know about blockchain is that with transparency records are irreversible which of course increases the level of trust towards the technology.
Impact on Financial Sector
Saying that Blockchain will bring revolution to the financial sector wouldn’t be wrong as its just the start and the technology has taken a stand in the sector. Blockchain came into fame with Bitcoin however numerous banks are looking forward to adapting the technology. Banks deal with the number of transactions every day with the risk of Cyber-attack as it is all based on the centralized system. You must have heard about another digital currency ripple. Ripple provides blockchain technology platform to financial institutions to increase the payment efficiency. Ripple facilitates global payment with peer to peer flow with quick verification of transaction.
This new technology is leading wherever it stepped in, let’s see how far it goes. Cheers !!