The blockchain technology owing to its benefits like increased business efficiency and secure Bitcoin transaction in a non-repudiable manner has come up as a support for the financial services.
Blockchain has been well-known as a public distributed ledger that manages and stores information about each Bitcoin that has ever taken place or will take place in the future. The technology has earned itself an influential entry in the finance sector and as the reports of 2015 say, Venture Capital (VC) firms made an investment of half a billion in blockchain technology. With this, the investment amount by the financial institutions in the US was reported to be almost $ 75 million. This amount is expected to increase 5 times by 2019.
The popular financial giants like BBVA and USA Bank have shown a major interest in the technology and have invested millions of dollars for its implementation in collaboration with the recognized Bitcoin service providers, that include Coinbase and Circle. Supporting a further research in the field, the startup businesses who wish to explore the area and come up with new concepts of the application of blockchain will be sponsored by Fidelity and Barclays banks.
Various Fields of Application of Blockchain Technology:
1) Secure Trade and Simplified Settlement
Eliminating the need for 3rd-party authentication and verification, blockchain technology can make settlement procedures simplified and secure. With this, the cost and the time that is taken for a settlement process will also decrease. The non-repudiable nature of the blockchain transactions also eliminates the risk of fraud. The private blockchain ‘Link’ from Nasdaq is a good example of the same. ‘Link’ enables the private companies to manage recordkeeping of shares with the changes in their ownerships.
2) Trading Assets Efficiently:
Blockchain technology also opens the door to secure and reliable trade of assets. Asset exchange between financial institutions have a high potential risk associated with them and require a considerable amount of time. The assets can be represented as virtual tokens used for the blockchain transactions. In 2016, R3 CEV (a technology service provider) employed a private blockchain network for experimenting the exchange of some theoretical assets. The banks that were part of the network were successful in executing the experiment in just a 5-day duration.
3) Efficient Asset Registration
Registration of physical assets is generally a time taking and costly process. However, it can be simplified and made cost-effective with the use of blockchain technology that helps you do away with the title insurance essential for a registry. The blockchain technology allows to speed up the process of transfer of ownership of physical assets like properties. With this, it is a cost-effective process. LLC, Ubitquity, and Factom are some startups that have been employing Blockchain technology for the registration of physical assets.
4) Transparent Supply Chain Management
The blockchain technology is capable of supporting the finance sector with the transparent supply chain management operations where you can easily track and manage the goods. Everledger, a startup business in London is researching in the field to track the ownership of some individual diamond units. The company aims to eliminate any scope of insurance frauds in the area.