Blockchain Technology vs Traditional Ledgers
Blockchain technology dates back to the 2007 economic decline that saw the world suffer from poor central banks management. Many banks were already in debt, and they were also minting excess fiat currency that raised inflation rates in the world. Satoshi Nakamoto made a digital currency, BTC, as a remedy. This currency has a design to solve this issue and avoid such mistakes since it is fully decentralized. Nakamoto also made his source code an open resource for other developers to make similar innovations and solve the banking issues.
A distributed ledger like blockchain technology gives control of all its information and transactions to the users and promotes transparency. They can minimize transaction time to minutes and are processed 24/7 saving businesses billions. The technology also facilitates increased back-office efficiency and automation. Here are some distinctive differences between Blockchain and Traditional Ledger systems.
Accessibility in Blockchain Technology
The banks are usually not available during the weekend. Therefore, people usually encounter many problems when expecting to complete essential transactions on weekends and holidays. The banks also require people’s physical appearance to complete huge transactions, which takes up too much time.
Extra Fees and Slow Transactions
Banks come with extra fees and taxes during transaction periods. For example, the sending and receiving banks usually impose very high transaction fees and taxes during international remittances. Due to slow protocols, these transactions also take a long time, especially for large sums of cash while the reverse is the case in blockchain technology
Blockchain technology Can’t Be Biased
Since bank transactions and financial services depend on account numbers and names, they are open to biases. In case of a feud with the officials of a certain bank, the financial service issuing officer can deliberately delay the transactions.
The biggest issue surrounding financial systems is security concerns. Cryptocurrencies run on blockchain technology which is highly intact and free from major security threats like hacking. It is also free from fraudulent activities since the system automatically processes the transactions with minimal human interactions. Therefore, if cryptos innovate more ways to deal with security concerns, they can remain better than banks.
The traditional banking systems use different techniques to market their work. They set aside some projects for select groups of people which cannot be available to the others. These groups get some favors like soft loans, prolonged payment durations, and lower interest rates. As a result, the systems end up being unfair and devoid of financial inclusion.