Blockchain and the Banking Sector: Reasons why government and its citizens should resort into adopting blockchain
By Jastine Gamora on The Capital
“Blockchain, cryptocurrencies are not acceptable and will not come into existence.” These were the words that pealed around the world half a decade ago! And yet, look at us. As of now, each company is now seeking to use the blockchain technology model to improvise its products.
The banking sector is nowhere other than in other sectors. Even the obvious financial sector aims to leverage blockchain for banking processes so that payments can be innovated for the compensation of each company.
Here is a collection of procedures and expenses that can be changed by blockchain deployment in the banking sector.
Blockchain in chit-chat
Blockchain is the distributed ledger software that chronologically tracks or stores information and is protected cryptographically. There are four sections in each data block: pre-hash, hash, info, bounce values. The corresponding hash value and timestamp are related to each data block in the network. The whole blockchain information transfers are therefore irreversible, tamper-proof, and encrypted with the algorithm of the SHA-256 portion.
If the client wants to change the information block, he must split the hash value of the prior block and the current block, which in the vast blockchain network is extremely unlikely. The hacker must pierce through more than 50 % of the nodes to hack the blockchain database, which must have out of the world resources. The key aspects of blockchain technology are security features that attract the attention of every industry.
Now let’s explain what the structures are in the banking industry that blockchain can improvise.
Blockchain advantages to the banking sector
Through incorporating blockchain technologies, the banking sector will effectively reduce the costs of significant operations. Here is the list of processes that the banking sector can rehabilitate using blockchain technology.
Know Your Customer (KYC) is decentralized
- the Know Your Customer (KYC) program, the entire banking industry spends over billions each year. Back-end departments with staff are hired to test the credibility and information of the client. It is not necessary to have only one bank account for the entire lifetime of a particular customer. Customers will turn to better transaction fees or any other mortgage reason from banks. While this is the case, the next bank in which the client opens an account is allowing double-spending.
- if blockchain technology decentralizes the entire banking system, they will exchange the customer’s KYC information. Like the entire team, this phase will cut-off back-end, charges expended on information confirmation.
a.) Indirect fees, intermediary payments say bye-bye!
- intermediaries leave while blockchain is in. With the decentralization of blockchain, anyone around the globe can send transactions to peers without third parties.
- incorporating blockchain, fiat and cryptocurrency tokens can be embraced globally.
b.) Dispute-free smart contracts
- the network is operating on a system of agreement, and it is permanent, irreversible. Smart contracts are code protocols that are configured to perform a specific condition-based operation. The loans, leases, contracts of the entire banking industry can be weaved into smart contracts, thereby paving the way for conflict-free transactions.
c.) Avoiding a common error point
- tracks network node data transfers. It thus overcomes the single point of failure that interferes with the centralized banking networks. Hackers are likely to damage the central banking databases and steal a handsome of cash without any difficulty. With the smarter structure of the blockchain network, even the single data block cannot be counterfeited.
Still a “progressed work in progress”: Blockchain for the banking sector
Nonetheless, the implementation of this new digital innovation into the banking sector also has potential risks. But the whole culture of the technologist aims to boost the blockchain for the banking sector’s betterment.
Discovering mobile phones at the beginning is even worse, as it’s just a tool from now on. With blockchain technology, let’s revolutionize the banking industry
