Govts Exploring Blockchain To Boost Fintech Innovation
Blockchains are in the news a lot these days. First, it was cryptocurrency such as bitcoin and then ethereum became a hot cake. A number of people might consider this as hype; however, the fact of the matter is that this new financial technology has the potential to radically and digitally transform accounting as we know it now. It has already started finding use cases across industries such as banking, insurance, etc. Financial institutions as well as governments are already sitting up and taking notice of this phenomenal technology and considering it as a suitable platform for eGovernance.
Factor these: The US House of Representatives gives the green light to Blockchain, advocating that the fintech innovation be implemented as a national policy for technology to promote consumers’ access to online commerce and financial tools in order to propel consumer empowerment and economic growth. Federal Reserve Governor Lael Brainard remarks how the new technology may have major impact on financial systems globally.
“We are paying close attention to distributed ledger technology, or Blockchain, recognizing this may represent the most significant development in many years in payments, clearing, and settlement,” she said. Brainard has also said that the Fed will publish a research paper on the subject of blockchain. This indicates the interest that the central bank has in the path-breaking technology and wants to discuss it with private and public sector stakeholders.
First World experiments and innovates with Blockchain technology
Governments of the world, particularly the First World, are showing keen interest in the technology hailed by the World Economic Forum as Technology Pioneer. Many financial experts term it as “the next best thing after the Internet.” The technology, which is behind cryptocurrency like bitcoin and ethereum, has started taking shape and implementation is round the corner.
The European branch of the International Securities Association for Institutional Trade Communication (ISITC) has proposed as many as 10 Blockchain benchmarks to standardize the set of tools in the market. The evolution of standards is key to improving adoption for organizations that have never used it or are unaware of the technology. It will also help improve user experience.
The benchmarks deal with data structure, scalability, auditability, regulation, legal jurisdiction, latency, software version control, etc. Globally, continuous efforts are underway to ensure that the technology creates decentralized and efficient data-sharing. This could replace the current siloed or centralized database infrastructure.
Blockchains will ensure real-time and seamless flow of information
A Blockchain is basically a decentralized distributed ledger (DDL) which is maintained by a distributed network of computers that doesn’t require any central authority or third-party intermediaries. With its inbuilt resistance to tampering and inherently decentralized nature, the technology is appropriate for retrieving as well as recording financial data. It can become the single source of truth for all organizations. Financial organizations like banks and insurance companies could remove the need for multiple local centralized databases. At the same time, the technology will ensure real-time and sequential flow of information across an organization seamlessly.
“Organizations could benefit in myriad ways. Data are processed faster as they do not have to go through multiple layers. Moreover, there is little chance of breach of integrity or data corruption. Organizations could move to a decentralized system. We would be able to unlock the capabilities for cumulative predictive intelligence and dynamic supply management with multiparty memberships, leading to truly multi-dimensional online B2B and B2C ecosystems. Our own systems and technology are based on this fintech,” said Shashank Dixit, CEO, Deskera.
Improved transparency and security in financial transactions
Industry leaders feel that the impact of blockchain can be truly significant; much like the accounting transformation brought about by the introduction of double entry over 500 years ago. Besides being faster and agile than the current systems, the new blockchain technology allows transparency in accounting as each and every transaction is being captured on a real time basis. Consequently, governments across the world are experimenting with the blockchain tech as a preferred platform for eGovernance.
Blockchains and cryptocurrency are the future of fintech
Blockchains could be the financial revolution for businesses and enterprises across the world. It can be particularly beneficial for Third World countries like India, which are faced with severe financial problems such as corruption. There is a lot of experimentation is going on in the world in finding a perfect mix for the blockchain tech and implementing it on the ground. For example, Honduras, one of the most corrupt countries of the world, is using Blockchains to remove corruption from its property market. The technology can radically change financial systems, rendering the current ones outdated. It is highly disruptive and could lead to traditional business models across industries getting dismantled. India should adopt the technology without much ado and lead the race from the front.
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