Blockchain.com: The ‘Ethereum’ of the Financial Industry
Blockchain is a decentralized database in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. Since its creation, developers have been looking at ways to apply the technology to other industries, with financial institutions being one of the most promising candidates.
Blog List:
1) Blockchain the future of the financial industry
2) How will blockchain technology change banking?
3) What is Ethereum, and how does it differ from Bitcoin?
4) How will Blockchain impact the financial industry?
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1. Blockchain the future of the financial industry
Bitcoin and the blockchain technology is the future of the financial industry. It is going to change the way we send money and handle finances. It is going to change the way we think about money.
IMO, it would be unwise to ignore this.
In this article I will list some of the advantages of using the bitcoin blockchain as a financial technology. The blockchain is the same technology underpinning bitcoin, but it is, unlike bitcoin, publicly, and universally) accessible. A piece of paper based on this technology contains a set of rules for when and how this data is transferred. If you read my previous articles about bitcoin, you will know I believed this to be the most exciting feature of bitcoin, and to have a system that allows for so much more than it allows is pretty exciting.
There are many networks available today which allow a variety of financial applications. I will not go into detail on bitcoin, but you can see that these existing networks do have a lot in common if you think about it. Each network has its own set of rules and incentive structures. Coming up with a unique set of rules for each of the hundreds of potential networks and incentivizing a pool of users to conform to these rules is tricky business.
So while the concept of the blockchain seems pretty limitless, one of its major limitations does bear mentioning. It cannot be used to transfer value between entities, such as companies and other organizations. All transactions needed to transfer value must take place on the blockchain. Even if the blockchain was invented to transfer money, as it is typically framed, it is very difficult to transfer anything on it. Consider the following:
Say there is a startup company working on a currency that incorporates blockchain technology.
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2. How will blockchain technology change banking?
Blockchain technology is changing the way banks conduct transactions. It’s a distributed ledger system which records all transactions in a chronological order. The transactions are recorded across a network of computers, which are all updated simultaneously. The information can’t be altered because it’s encrypted. Blockchain could improve and streamline financial transactions by creating a more streamlined process for financial institutions and individuals. Also, app-based blockchain solutions provide customers with a more intuitive mobile experience. The technologies are expected to revolutionize how businesses transact, especially in light of the recent regulatory changes around virtual currencies.
With the proliferation of blockchain technology, there will be new opportunities for financial institutions to better manage their operations. Consumers would be able to securely send and receive money even if the financial institution were to collapse. This wouldn’t be possible without blockchain, but it wouldn’t have come about without developing bitcoin and other cryptocurrencies.
How Does Blockchain Benefit Consumers?
Blockchain technology brings transparency to the industry. Someone, such as a retailer, who uses a blockchain solution will not need to get approval from dozens or hundreds of different parties for every single transaction they make.
On the other hand, there are risks involved with using blockchain without any guidance. For example, a blockchain developer whose code has gone bad could inadvertently add more than 0.01 percent to a transactions’ total value.
In general, people rely on the consistency of the information in financial transactions to carry out transactions more safely. Blockchain “is designed to be a ‘distributed, global, decentralized storage system and transaction clearing house’” according to Wikipedia, which is “sound tech but not suitable for some use cases” due to its “higher costs and less efficient operation” and “reliance on nodes controlled by an individual or institution” (to borrow from the Wikipedia description).
However, the technology could change the way stocks, bonds, and other assets are traded.
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3. What is Ethereum, and how does it differ from Bitcoin?
Ethereum is a distributed public blockchain network that is used to build decentralised applications. It provides a platform for developers to build apps that run exactly as programed without any possibility of downtime, censorship, fraud, or third-party interference. Ether, the token that fuels the network, is mined through a Proof of Work protocol much like Bitcoin.
Übersuggest is an opensource,e-collaborative project that enables anyone in the world to create, share, remix and improve Übersuggest content with the potential to create a content marketplace similar to Creative Commons, but on the Internet.
Algorithmia is a system that estimates the probability of events in research papers and patent applications. Algorithmia generates content ratings for scientific papers, patents, and other academic content to guide the flow of investment in research. Research papers that would have been rejected may now be funded, and risk-averse marketers are given more information so they can make informed decisions about making their content and campaigns more effective.
BennettJAX, is an API-driven, self-hosted, blockchain-powered news Suggest engine that enables publishers to generate new content and connect with publishers through a decentralized Ad-hoc network. The platform helps publishers demonstrate interest in the content created by developers who are then rewarded for contributing relevant media coverage.
SiteAd and MineSafari are two mobile-friendly block chain projects, designed to provide data and analytics services to major websites.
On-Blockchain Experiments
As the technologies to build on-blockchain apps continue to develop, expect to see more experimentation with these solutions. Some exciting projects currently on the market include:
TLSVC by BlockTower (ex-PayPal) – This is the only publicly available peer-to-peer encrypted blockchain application. Private and public blockchain networks built using TLS are being developed for mainstream financial services, such as mobile payment, wealth management, tax management, asset management, and insurance.
Gadget4Hire by jet.com (ex-Asana) – This project proposes to use blockchain to improve the hiring process for consultants across the US by transferring information about prospective employees, such as their previous jobs, previous pay histories, skill sets, etc.
4. How will Blockchain impact the financial industry?
Blockchain will impact the financial industry in the same way the internet impacted the publishing industry. Blockchain will put more power in the hands of the individual and take power away from the establishment. It will eliminate the need for middlemen and allow us to transact with each other in a way that has never been done before.
The biggest issue with the future is how you will recognize customers on the bench. Google will be more than happy to call them bad names faster than you can spit out your groceries.
Even those who deal with regulated financial institutions probably haven’t grasped the sheer magnitude of how much manufacturing finance is ripe for disruption.
Transactions, previously local and small, now involve trillions of dollars in capital. Bullish investors have been piling into companies like First Data and Virtuoso, which intend to disrupt the financial services industry and revolutionize trading. On the investing side, individuals have been flocking to high-tech trading platforms like TradeStation, which Last Call reports can allow users to invest in hundreds of thousands of stocks at a time.
Meanwhile, everyone else who needs to transact with banks or financial institutions feels like they’ve been left behind. These new technologies promise to eliminate the middlemen and allow individuals to directly buy or sell anything they desire without ever leaving their home.
One company, Civic, charges customers $2,500 per year and provides a hardware wallet, a mobile app, and a back office structure. The then 32-year-old Ryan Cohen created the company after being outbid on a pitch for $65 million to become the first VC-backed IPO of the year. Cohen had to drop his plans to go public, however. He felt the IPO’s terms restricted his ability to continue growing—hence the creation of a hardware wallet.
Cohen has encouraged his customers to use the Blockchain to transact. Notably, he said, “We think about Bitcoin as a computer in your pocket.
Conclusion: Blockchain technology could drastically change how banks operate, but that doesn't mean that it's ready for widespread adoption yet. There are still some issues to iron out, but businesses need to start preparing now so they can take advantage of this new technology when it becomes more common.
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