Created on August 30, 2018 1:48 pm
In a recent interview Brock Pierce, the chairman of Bitcoin Foundation, a cryptocurrency advocacy organization based in America, said blockchain technology will have a negative impact on some aspects of banking, especially areas that do not offer much value, it will ultimately create new opportunities for banks. Andrey Sharov, a vice president at Sberbanks, a Russian bank, recently told journalists that blockchain technology would render banks redundant within a decade. Below are some key facts on how blockchain technology will affect the future of banking.
Brock Pierce, the founder of blockchain technology senses the future of blockchain will be in the direction of how a couple of key players foresee. Precisely, banks generally sense that the technology may have countless applications in the banking space, from remittances to securities exchanges to improving efficiency. A couple of the world’s biggest banks, including Goldman Sachs Group Inc, Citigroup, and JPMorgan Chase & Co are in the process of developing banking products based on blockchain technology.
The blockchain is fundamentally a distributed ledger that receives input from a set of individuals. This means that it is an endlessly growing list of transactions or data records. The four gears of a typical blockchain include an ID (“hash”), hash number from the previous block, transaction(s) and public key (sender/receiver identities). To alter an entry on the ledger, the group has come to reach a consensus. For these reasons, a blockchain creates secure and verifiable records. On the digital front, a blockchain prevents the replication of information and keeps information/data very secured.
Blockchain technology is identical with smart contracts, it’s essentially a computer protocol that can validate, enable, or impose the negotiation or performance of a contract. While it is generally difficult to into a computer program, it is relatively easy to incorporate it into a blockchain, enabling it to execute contracts easily and conveniently.
In the banking world, blockchain-based smart contracts could be using countless processes including trading debt securities, improving KYC processes and issuing bonds. A recent statement from Autonomous Research, a research company based in New York, NY, indicates that smart contracts can help banks cut their back-office expenses, as well as labor charges.
It is worth noting that Goldman Sachs Group Inc, Citigroup and JPMorgan Chase & Co were among the founding members of the R3 consortium. Founded in September 2015, the R3 consortium aims to explore and develop blockchain-based products for the banking industry. The R3 membership currently involves more than 70 banks and financial institutions from across the world.
Blockchain technology will likely have a constructive influence on the banking industry. This is according to Brock Pierce comments on the future of blockchain. In particular, the technology will advance safety, productivity, as well as boost revenues for bankers. Some of the principal banks in the world are already exploring this blockchain technology.
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