Applications of blockchain technology in FinTech
Blockchain technology has been gaining increasing popularity among many enthusiasts. The constant improvement of the code and fixing bugs has led to its active promotion and strengthened trust.
The application of blockchain in FinTech is extremely diverse and not just limited to cryptocurrencies. Banks have a key interest in the application of blockchain due to the fact that the technology allows for simple contracts to be concluded automatically, without the need to involve intermediaries.
Similarly, blockchain technology plays a key role for financial organizations, as it allows them to solve such problems as:
1. Security. Today every piece of information is stored centrally. Security systems, passwords, and other functions have been developed to ensure the security of information. Although, even the biggest world-famous networks can suffer due to hacker attacks. Personal data theft can also occur, as a result of which funds may be stolen from customer accounts. In this regard, security is one of the main problems facing financial organizations. Owing to its decentralized structure, blockchain technology dramatically changes the principle of information storage. It makes hacking the system meaningless since information is stored simultaneously on numerous computers, each block confirms the next block, and so on, and transactions cannot be conducted without first obtaining system approval.
2. Data consistency. Blocks have their own unique codes. They not only contain their own information, but also information about other blocks. If someone manages to change the data in one element, the other elements will still remain unchanged. This guarantees that the conditions are not falsified and changed “retroactively”. It is this system that allows the technology to make the market transparent, guaranteeing the safety of personal information. Information regarding transactions is publicly available, while the sender and recipient’s personal information is kept completely private.
3. High speed and enhanced operation reliability. Automated mechanisms that simultaneously carry out a wide range of actions make it possible to attain high speed. This has a massive impact on the banking sector, as it not only provides a significant increase in the speed of operations, but also reduces the costs of administration and paperwork, not to mention the elimination of errors caused by the human factor, as well as loss of documents, etc.
4. Attracting investment. Carrying out ICO for raising funds has proven to be highly effective for a huge number of startups and projects of major players. The whole process is implemented with greater organization, it involves fewer costs, and it is extremely effective. Financial organizations, interested in attracting investment, greatly appreciate this process. Unfortunately, due to lack of legislation, they have a lot of complications.
All the above-mentioned advantages distinguish blockchain-based applications, which are now being actively implemented in many fintech projects.
Many banks intend to use blockchain as part of their daily activities. For example, the Ripple transfer platform allows instant international transfers, simultaneously converting funds from one currency to another. This is a rather interesting example of the interaction between the banking structure and the blockchain. Financial experts forecast that this platform will become one of the promising directions for the future development of blockchain technologies in the banking sphere.
Also, the Crypterium cryptobank deserves special attention. It stands out among its competitors as it offers not only to carry out transactions, but also enables the possibility to receive cashback and participate in a loyalty program, etc. In other words, almost completely imitating standard banking services.
Financial organizations share the ultimate goal that with the application of blockchain, the system will be completely decentralized and transparent, as well as providing the opportunity to eliminate intermediaries, which otherwise slow down the provision of services.
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