Do Blockchain Improve Industry Transactions?
The blockchain is a chain of blocks that consists of information. This approach was described back in 1991 by a group of researchers and was formerly planned to timestamp digital documents and went by mostly unused until it was adopted in 2009 again. The distributed ledger is absolutely open to anyone and when the data has been recorded, it is remarkably difficult to change it. Below is an image illustrating a block within the blockchain.
The data that is stored inside the block depends on the type of blockchain. The block also consists of hash. You can actually compare a hash to a fingerprint as it identifies a block and all of its contents. So once a block is created, it’s hash is being calculated and any type of change made inside the block will cause the hash to change. In other words, hashes are very useful in identifying changes made in the blocks. So when a piece of information changes, it is no longer the same block.
The third element is the hash of the previous block and it is what makes the blocks to become blockchains; be tied together. The first block is known as the ‘’genesis block’’. Any changes made in the hash will not fit the ‘’hash of the previous block’’; and make all the following blocks invalid. Although, bear in mind that using hashes is not enough to prevent tampering thus blockchain has this magic stick called ‘’ Proof-of-Work’’. It is a mechanism which makes the blockchain secure together with being distributed.
Instead of using a central entity to manage the chain, blockchain uses a Peer-to-Peer network and anyone is allowed to join. When someone joins this network, they get a full copy of the blockchain and the node can use this to verify that everything is still in order.
How will the Blockchain improve cross-border payments?
With generational transformations in expectations, banks and the payments industry are competing to counterpart the efficiency and accessibility that digital payments have acquainted with purchasers. Now it’s time to make the back end just as convenient. Although the increasingly global society, cross-border payments as well as transfers in some parts of the world are an area that is still trapped in a process that takes multiple intermediaries and days to finalize. On this wise, the blockchain technology is poised to usher in the next large-scale shift in payments.
Let’s assume a businessman in Dubai has received goods from Morocco. Although he is going to issue the transfer order immediately, he has no way of knowing when the payment will arrive at its destination. On the other hand, the businessman is not sure about the amount of money he should be transferring due to the additional charges the process may entail.
With the blockchain-based technology payment gateways such as MenaPay; each transaction will be recorded and the traceability will be much clearer at all times, making it more transparent to its users transferring cross-border payments. Turning payments into a sequence of coded and digitally signed events makes it possible to collect all the information necessary about the process from start to finish. It will also make it available for all the parties involved in the payment.
As a result, anyone making cross-border payments/transactions using a blockchain-based payment company will be able to transfer within seconds rather than a couple of days.
For many advantageous reasons; it is expected for more financial institutions and payment solutions to adopt blockchain technology and assist the exchange of digital currencies, bonds, securities, and structured financial assets. The opportunities are huge in number and the evolvement of blockchain itself will also make favorable and suitable connections between the customers and banks.