4 Ways Blockchain Is Revolutionizing FinTech in 2021

Bitcoin, Ethereum, and other cryptocurrencies are powered by blockchain technology, creating a new digital financial sector.

But what is blockchain?

And how is fintech revolutionizing?

Blockchain technology is best known as the technology behind cryptocurrencies. Bitcoin, Ethereum, and all 4,000 other cryptocurrencies operate via blockchain, making it one of the most important recent innovations in the financial world.

Here are 4 ways in which blockchain is revolutionizing fintech.

1. Create a digital ledger

Blockchain is similar to an accountant’s ledger, according to Carlos Barbero Steinbock (pictured), professor of cryptocurrency, blockchain, and the fintech industry at EU Business School, which offers blockchain specializations in its MBA program.

Generally, you have pages that record transactions, with a timestamp and notes, and also block transactions on a blockchain record. By compiling and chronograph each transaction in chronological order, a blockchain can digitally record the entire life cycle of money as it flows and changes hands.

“It creates an infinite chain that will last as long as there are active people using it,” said Benjamin Xie, also a professor of cryptocurrency and related subjects at the EU Business School.

This is important in the banking and accounting sector, where accurate tracking of transactions is essential.

“There is a life cycle of how the money was deposited in the bank, where it came from, how it was used and what it did next,” says Benjamin.

Automatic registration means that the blockchain greatly improves the efficiency of the transaction registration process, reducing the time required to register books and reducing the cost of manual registration.

2. Protection against fraud

A blockchain is also decentralized, which means that no one controls the chain. It cannot be changed in any way. Using distributed ratio technology, each transaction or block is recorded through a node which can be any smartphone, computer, or larger server and there is nothing connecting the nodes.

Benjamin (pictured) explains that this immutability means that a blockchain can capture complete and immutable financial reports for each transaction, providing excellent protection against fraud.

“This gives you more responsibility for transactions and means fewer accidents,” he explains. ‘You can’t point your finger with a blockchain; if the fraud goes back 100 years for a specific transaction and a specific person, then you know who it is. ‘

Although there is still a small chance of joining a blockchain, when someone has more than 50% of the nodes in a chain and can validate their transactions, the incidents that occur are rare.

The combined value of all available cryptocurrencies will exceed $ 1.8 billion in 2021, and Bitcoin alone is worth more than $ 1 trillion. As all digital currencies are produced by code, the cryptocurrency market is a profitable price for any hacker.

But since Bitcoin was founded in 2008 as the world’s first cryptocurrency and blockchain, the chain has never been interrupted thanks to its decentralized structure.

The capabilities it offers in terms of security – this is where the biggest innovation in blockchain lies.

3. Remove third parties from transactions

Blockchain’s advanced security offers several benefits, including the ability to bypass traditional fraud prevention methods that require multiple parties to validate transactions.

Every financial transaction requires the government to ratify it, or process Visa or American Express card payments, or the many people who work at investment banks as ratifiers of transactions.

Sometimes there are twelve parties arguing and acting, and it does not work for anything, which makes everything expensive.

By 2020, Citigroup, a multinational financial and investment banking provider, will falsely earn $ 900 million due to shortcomings in the ratification process.

Errors like these would be impossible in a blockchain because of the decentralized network. Transactions on a blockchain are automatically validated when they are sent to all network nodes for authentication. This eliminates the need for third parties, says Carlos.

Through a blockchain, we can get rid of all the layers and only pay for what really matters, that’s the product or service we need.

4.Democratize money management

The most well-known use of blockchain in fintech is the use of cryptocurrencies, which allow you to keep your money without a bank.

Those who buy Bitcoin, Ethereum, or any other currency can choose to keep their currency in their digital wallets. Wallet holders have a private key needed to send and issue their encryption, and a public address that allows them to receive payments from third parties.

Whoever has the keys is the sole owner of the coin. Unlike traditional currencies, there is no money bank.

Carlos believes this is the true value of the fintech blockchain. Bitcoin and other cryptocurrencies give people freedom and ownership, he explains, manage your assets, you do not have to depend on anyone for your money.

However, saving money still involves risks. If you have forgotten or stolen your private key, there is no way to get the money back because you are responsible for it.

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