Blockchain is a public electronic ledger that contains an extensive amount of encrypted information about transactions that occur through the system, this information is an unchangeable record that is both time-stamped and linked to the previous “block” thus creating the most optimal transaction system. While this technology is relatively new, the capability behind this system is unmatched and has the potential to completely revolutionize a multitude of industries. One of the greatest benefactors of this Blockchain revolution being: international banking.
In the past, the process of both sending and receiving money across borders has been a rather primitive process that required multiple banks to act as middlemen between the correspondents. Which often takes far more time and money than necessary to complete, with the World Bank estimating an average of 7% of the transferred cost going directly to the banks. Through the implementation of this radically subversive Blockchain technology, the process of completing international transactions is able to be significantly simplified by directly connecting the parties together in real-time. This is done through the encrypted Blockchain system that is able to streamline and store the transactions in a secure distributed ledger without the need of individual banks to both delegate and redistribute the funds to the correspondents. The benefits of Blockchain completely outweigh the traditional method of international transactions, from the speed of transactions to the cost of completion, and the transparency behind the system.
Thanks to Blockchains’ global network of nodes that each contain a copy of the Blockchain that is autonomously updated every ten minutes, the speed at which a transaction can be made is almost instantaneous. According to blockchain consultants, payments that are done internationally through multiple banks can take up to two to four business days to complete, while payments completed using Blockchain are able to be accomplished in just a few short seconds. This is an extremely important factor when time is of the essence and allows businesses to quickly address customers’ needs and swiftly take action on important matters.
Due to the fact that Blockchain is independent of all banks, the transfer fees that were conventionally added to the cost of every party involved in international transactions are no longer pertinent. This aspect drastically decreases the total cost of transferring funds and could potentially result in a 40% to 80% reduction in transactional costs, which is an extremely beneficial factor specifically with large businesses who are constantly transferring substantial amounts of money to a plethora of international accounts. As a result, many experts in the banking industry claim that the implementation of Blockchain in the transferring of funds could cut up to 20 billion dollars in middleman costs.
Being that Blockchain is a decentralized ledger, financial records are updated communally by a large group of connected servers called nodes that each contains an identical copy of the ledger. The nodes that make up Blockchain write and store a verifiable and irreversible record of all transactions that occur throughout the system, which in essence completely eliminates the possibility of discrepancies in record keeping. This system differs from that of standard banking in that traditionally financial records are stored separately in multiple databases around the world, leaving the potential for inconsistencies in information and the risk of human error.
Potential For Privacy
One particular problem Blockchain has the potential to almost completely eradicate is that of the protection of our privacy in the digital plane. In today’s technological world, personal information and related data are perceived as a commodity by many businesses and are bought and sold as such. Almost every app and subscription we make today require users to create a profile and forfeit potentially sensitive personal information to the business. Once the companies have a hold of this information they are almost unregulated in what they can do with it leaving customers extremely vulnerable, oftentimes this data is sold to other companies with which you have no association. Through the further development and implementation of Blockchain in the near future, things like creating profiles and submitting personal information to almost countless amount of corporations could be a thing of the past. Blockchain could provide all users with their own personalized digitally encrypted identities that would allow them to both manage their online information and safely track/ store all of their personal data. This would allow for the users’ information to no longer be stored in a multitude of centralized corporate databases, but instead in their own encrypted Blockchain which would give the individuals the power to decide which data they are willing to share and with whom.
The potential behind this revolutionary technology is unmatched and the application of its uses is crucial to the advancement of Blockchain itself and the industries in which it will progress. Just as card payment systems revolutionized the way consumers buy products and completely disrupted the need for cash, Blockchain holds the capability to revolutionize the digital transfer of data. Change tends to appear like a burden to put in place although is often a necessary step in the progression of society that will open the doors to a magnitude of innovation.