Bitcoin gets most of the attention because it seems to defy categorization. Is it a currency? Is it just hype? Is it a fancy technology without any real application? But Blockchain technology, the same one that makes Bitcoin possible in the first place, is finding many real-world applications. Let’s look at the ways blockchain is affecting the world of finance.
Blockchain allows people to engage in transactions without intermediaries like banks, rating agencies and government bodies. By allowing people to verify identities and perform transfers securely and quickly, you get far faster financial transactions as a result. You don’t have to worry about delays in receiving payment, while “check floating” becomes almost impossible. By streamlining operations and speeding them up, financial institutions will also be able to handle far more transactions in a given day, generating more revenue and/or allowing them to reduce headcount without impacting service.
Proof of the Legitimacy of Papers
If you have an online master of science in finance, you’ll learn how the process of verifying documents currently occurs and how it is changing. Blockchain is being used to verify credentials and documents. For those working in finance, blockchain is being added to titles, securities and other items so that their ownership can be verified. As a matter of fact, colleges like Northeastern University are gradually adding smart contracts and blockchain as part of their online master finance program.
Title searches, for example, are about to move from the courthouse to the computer. And as Blockchain is adopted widely, you’ll be digitally signing off on your loan papers to prove that you agree to the terms. It may even reach the point where every bill payment and check are signed via Blockchain.
Running transactions through intermediaries and relying on third parties to perform checks results in costs. Whether you’re paying for a credit check of a borrower, verifying that a title is clear, or rely on third party intermediaries to transfer money, institutions and individuals pay for these services in a myriad of ways.
It may be a cost borne by the financial institution paid for eventually by account management fees, directly as a percentage of the transaction or one-time fee for the service. When Blockchain lets you eliminate the reliance on these intermediaries, you eliminate their affiliated costs.
And financial institutions are pouring money into Blockchain to reap these savings. For example, Santander, a European bank, expects to save up to twenty billion dollars a year by adopting Blockchain. Now multiply these savings across thousands of institutions. Capgemini estimates that consumers themselves would see around twenty billion dollars a year in savings through the elimination of most banking fees.
We can expect Blockchain technology to completely transform the way transactions are made. Blockchain is streamlining asset verification while speeding up transactions and report generation. The elimination of many third-party processors and verification services will save institutions and individuals significant money each year. Blockchain is already being used in digital contracts, and they will start to be adopted for a wide array of signatures, potentially down to the level of individual checks.