Blockchain will change finance forever

Blockchain is the technology behind the phenomenon that is bitcoin – and it may end up changing how the finance industry operates forever.

From payment processing that bypasses the banking system to cryptocurrencies launched by central banks, its impact could be significant.

However, this technological disruption is unlikely to happen overnight, as regulators will want to keep tight reins on the global financial system – but what could we have in store?

A blockchain enables any type of encrypted data – from electronic money to medical records – to be shared between members of a closed network.

A blockchain enables any type of encrypted data – from electronic money to medical records – to be shared between members of a closed network.

Blockchain protects the data from fraud and updates all the members concerned. It is what is known as distributed ledger technology (DLT), allowing a network of computers to agree at regular intervals on the true state of a ledger’s position.

Copies are shared between all participants and a process is established by which users agree on changes to the ledger. Since anyone can check any proposed transaction against the ledger, this means there is no need for a central authority.

Proponents of the technology argue that it will ultimately reduce the need for much of the financial intermediation that provides lucrative earnings for many businesses, as it essentially removes the need for middle men.

As a result, financial services firms are actively exploring how they can use blockchain to save costs and remove the existential threat it poses.

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Source: Blockchain will change finance forever – Brisbane Times