Although Blockchain Applications in The Financial Sector have been a buzzword for over ten years, most people still don’t fully understand the idea behind the technology or its scope of use. A blockchain is a specific type of database. Despite what some may think, it is not on par with Bitcoin and other cryptocurrencies. As an alternative to distributed ledger technology, blockchain can be used to securely create a public ledger for bitcoin trading.
Blockchain Applications in The Financial Sector
One of the most innovative and exciting uses of blockchain technology is its ability to establish trust between two individuals or entities who do not already know each other or trust a third party. Additionally, like Bitcoin, the technology has the potential for a variety of uses, from disrupting the banking industry to increasing the number of people using cash in emerging economies around the world. Slava Vanukov says, expert and CEO of Softermi.
The most common blockchain application in the financial sector
For example, keeping records, enabling shareholders to vote, and verifying transactions are time-consuming and vulnerable to human error and theft.
Verification and access of transactions in real time brings significant progress. This section examines blockchain applications related to the financial industry.
Opinion:
Small shareholders are usually reluctant, while large shareholders usually vote in favor of their own interests. Voting options for shareholders include voting, online presentations, attendance at the annual conference and proxy voting. Brokers are responsible for preserving title deeds in street names, as it is difficult for companies to maintain accurate voter lists.
Ways to reduce significant costs of the current system include mailing documents, hiring solicitor-lawyers to contact shareholders to achieve a quorum, and tabulating results with voting amendments. Companies with different share classes and staggered voting rights make this process more difficult.
Transparency enabled by blockchain technology improves corporate governance, lowers capital costs, reduces theft and improves accountability.
Credit Report:
Credit reports have a significant financial impact on consumers. The latest data breach shows that blockchain-based credit reports are more secure than traditional server-based reports. Blockchain could potentially allow companies to calculate credit scores by incorporating non-traditional factors.
Foreign Exchange Transactions:
Large institutional players, central banks and companies operate the foreign exchange market, which is vast, decentralized and mostly deregulated. Now trading takes place in the spot market for shipping and later in the futures market for shipping.
Every transaction requires huge amount of documents from all the office staff. Additionally, each transaction requires counterparty verification. Transaction details are provided to each counterparty’s custodian and other relevant parties. To reduce the complexity of transactions and money transfers, positions are compensated.
With authorized blockchain systems, you can monitor position sizes and reduce pricing errors. As a result, blockchains can instantly transfer and store values/currencies as well as store and transmit transaction details.
Digital Identity Verification:
Financial institutions such as banks can now identify people with blockchain-enabled IDs. When customer identity information is secured through blockchain, banks can increase public trust while preventing theft and speeding up verification systems.
Real Estate:
When buying or selling commercial and residential property, the acquisition process involves many tedious steps. When finalizing a purchase, customers exchange several documents and
Conclusion
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