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How Blockchain Technology is Disrupting Financial Sector

Cryptocurrencies and Blockchain Technology are paving the way for digital transformations in the current world. Moreover, the global financial economy is already transformed into higher levels. This is with the implementation of Blockchain Technology in them. It is emerging in its full operational deployments and disruptions of fundamental processes. This is particularly related to the […]

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Blockchain in Finance Industry
How Blockchain Technology is Disrupting Financial Sector

Cryptocurrencies and Blockchain Technology are paving the way for digital transformations in the current world. Moreover, the global financial economy is already transformed into higher levels. This is with the implementation of Blockchain Technology in them. It is emerging in its full operational deployments and disruptions of fundamental processes. This is particularly related to the buying & selling of goods. 

Additionally, the financial services industry contributes around 20% of the global GDP it seems. As the global financial system deals with a plethora of data every day, it is important to make them secured. 

These financial sectors have a lot of intermediaries to process the operations. This includes Stock Exchanges, Payment processors, Money transfer services, etc. Thus, Blockchain could be a feasible solution to get rid of the major problems involved here.

Why Blockchain in Financial Sector can be beneficial?

Here are the four major reasons why Blockchain can be adopted than other popular technologies in the financial industry:

  • Payment and data transfers facilitated by central authority are still the same. It has been more than a decade. Moreover, international transfers would take more than four days. With this, there are risks associated with credit/debit cards, exchange rates, etc. 

In addition to this, industry too will involve a high amount of transaction fees. With Blockchain Technology, all these transfers can be made cheaper & faster which other technologies lack.

  • Most of the industrial processes are delayed for an upgrade or other issues. This is to withstand security, hacks, higher volumes, etc. 

Thus, by implementing Blockchain Technology, the process becomes more feasible as there is no centralized system involvement.

  • There are greater chances that people would start making smaller transactions and payments. Hence for a smaller transaction, having a larger transaction fee won’t be better. With Blockchain, we can expect higher volumes and lower transaction fees.
  • Blockchain Technology will also enable further disruptions of the traditional banks with fintech. Legacy problems, new participants, etc can utilize the blockchain platform to remain benefited. 

In addition to this, Blockchain can be beneficial with the following factors:

  1. Accessibility
  2. Security
  3. Encryption
  4. Privacy
  5. Interoperability
  6. Scalability

Let me explain to you these main challenges and how blockchain can solve them in brief in the upcoming section.

Challenges in the Financial Sector & How Blockchain solves them efficiently:

  • The Need for Decentralization

Most conventional financial systems are based on traditional centralization. As we have discussed earlier, it involves a great number of intermediaries to facilitate the transactions. This can, in turn, take additional time and cost for operation. 

In addition to this issue, centralization lacks security. Security plays a couple of roles here. Initially, higher-level managers & individuals have access to employee and customer data. There are chances that they can use it for their beneficiary purpose. 

While on the other hand, data are equally considered as gold. With centralized systems, customer’s sensitive data is held in central servers. This means that even a single breach of data can lead to the access of millions of records for the hackers. 

Blockchain Solution:

With Blockchain in Financial Sector, one can eliminate the intermediaries by cutting down & saving time and money. The decentralized nature of Blockchain Technology will eliminate both these risks. 

A consensus on a decentralized platform involves an agreement. This should be accepted by all the network participants. Hence, the decisions are not made by a single party but a set of individuals with the desired expertise. 

Moreover, the data is not stored in a single server. They are spread out and encrypted throughout the network. So, there are no chances of fraudulent activities to take place. To hack this, hackers have to access the complete record of data which is impossible. Thus, Blockchain’s decentralized nature can secure the data efficiently. 

  • Cost-Savings for Border Payments

Because of its cost-saving benefits, the industry of finance is experiencing high-level changes. International Payments have become more expensive in recent years. These border payments include a lot of intermediaries to operate them. Hence, the cost involved will also be a bit higher. 

Blockchain Solution:

By implementing Blockchain in Financial sectors, transactions can be completely streamlined leading to efficient yet instant transactions. It not only makes the cheaper but also safe & secure. This is done by handling the transactions over a reliable blockchain network and eliminating the intermediaries. 

According to a recent report, it is stated that Blockchain technology could save up to $12 billion every year. Thus, Blockchain solutions can cut off additional and unwanted costs with international payments.

  • Invoice Management & Billing

Managing a huge amount of data is always a daunting task not only in Finance but in every sector. Most of the financial companies have started adopting electronic invoicing. However, this equipment lacks the standards that are required to execute invoicing in the financial sector. 

An Invoice usually contains a couple of steps:

  1. Verifying and tracking the information
  2. Forwarding & receiving the invoice information

Thus, while processing these two steps, it is important to store and maintain the data effectively & securely.

Blockchain Solution:

Financial companies can now upload their invoices with Blockchain through Smart Contracts. Invoice information such as Due date for payment, the total amount to be paid, the client’s personal details, are stored in the Blockchain Network.

Once the person pays his/her bill, the smart contracts update the data accordingly as “Paid”. Hence, Blockchain can help to make the decision if the client is safe to get started with trading.

  • Know Your Customer (KYC)

Banks and financial firms have implemented strict concerns with the cost involved with KYC & AML. These tasks consume a lot of time and money for the banks for every single individual.

One of the popular mass & information media firms called Thomas Reuters unveiled that the overall expenditure of this process ranges from $60 million to $500 million every year. Moreover, financial institutions should now have to upload the KYC data to their central repository to perform these.

Blockchain Solution:

With the adoption of Blockchain in Finance, the individual verification of each client by a financial organization will be accessible for other banks as well. This means that the duplication can be completely eliminated with Blockchain Technology. 

In the same way, all the updates of the client’s will be visible to all the financial institutions. This would result in the reduction of Admin efforts & costs from the financial department representatives.

  • Trade Finance

Trade Finance is considered to be one of the most useful applications of Blockchain in Finance. All the involved parties go with a complex mode of transactions Financial companies are planning to use Blockchain to save the immutable funds of finance-related information such as profits earned, MoM, financial history, etc. 

Blockchain Solution:

With Blockchain in the financial sector, all the participants in the transactions will have access to the information shared by exporters, importers, banks, etc. Once the particular conditions are met, smart contracts start executing. Hence respective parties can view all the actions performed.

One of the popular statistics states that an Israel-based startup along with Barclays has successfully executed a trade transaction that takes around 7 to 10 days. But with Blockchain Technology, it was a matter of just 4 hours. Thus, when comparing to the traditional architecture, the usage of blockchain can drastically reduce time as well as the cost.

The future of Blockchain in Financial Sector:

The future of blockchain in finance is drafted every single day to make it reach higher levels for an efficient process. Once these Financial firm starts adopting Blockchain Technology, they can taste real success in them.

More and more intermediaries start emerging, Financial sectors would realize the importance of Blockchain Technology. Added, Liquidity is one factor that is entirely rendered by Blockchain compared to other technologies. Undeniably, with these top-notch facts, we can expect the Blockchain development company worldwide to cater to all these resources.

To put it all together, we can notice a very bright future for Blockchain Technology in Financial Sector. This technology would effectively enable financial transactions a bit easier, cost-effective by enhancing liquidity.  

Author Bio

Robert Kroos

Crypto Writer at a leading blockchain development company. I love to share my ideas & thoughts on Blockchain & Cryptocurrency in a simple & readable manner.

Source: https://coinweez.com/blockchain-technology-application-finance-industry/?utm_source=rss&utm_medium=rss&utm_campaign=blockchain-technology-application-finance-industry

Blockchain

Indian government cautious about crypto-adoption, CBDC is a possibility

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Indian traders and exchanges might be bullish about the crypto market, but the Indian  government doesn’t seem keen on rushing into the scene. At least, not until studying its homegrown fintech industry and the anti-Bitcoin protests in El Salvador.

Tracking global news

Indian finance minister Nirmala Sitharaman in a recent interview with Hindustan Times explained why the country seemed to be falling behind when it came to crypto adoption.

Though she admitted, El Salvador wasn’t “the best example,” Sitharaman said,

“You’d think common people don’t care about digital currency; but the public took to the streets against the move. It’s not a question of literacy or understanding – it’s also a question of to what extent this is a transparent currency; is it going to be a currency available for everyone?”

Sitharaman referred to CBDCs as a “legitimate” cryptocurrency and admitted there could be a “possibility,” in hat regard. She noted that India held the “strength of the technology” and acknowledged the need to formulate a Cabinet note. However, Sitharaman wondered if India was ready to follow El Salvador’s way.

Facts on the ground

Though accessibility is a pressing concern, more Indians have discovered crypto than perhaps expected.

Nischal Shetty, CEO of the Indian crypto exchange WazirX – a subsidiary of Binance Holdings – has stated that WazirX sign-ups from India’s tier-two and tier-three cities overtook those from tier-one cities this year. Even so, sign-ups from tier-one cities themselves saw a 2,375% rise. Furthermore, WazirX added one million users in April 2021 alone.

Adding to this, the cost of electricity and Internet data in India are relatively cheaper, which could boost both crypto trading and mining in the future. However, at the last count, there was only one Bitcoin ATM in the whole country.

As per data by Useful Tulips, which combined data from Paxful and LocalBitcoins, India saw transfers worth around $4,502,369 in the last two weeks.

Could anti-Bitcoin protests happen in India?

There is evidence to support both sides. India has a strong history of mass protests, with the farmers’ protests against the government’s agricultural laws being one such example. The 2016 demonetization of part of the country’s paper currency still haunts many, and Internet penetration is yet to cross 50%.

However, India also has the largest diaspora in the world, with approximately 18 million people living outside the country. Crypto innovation could lead to hundreds of millions of dollars being saved on remittance charges as money is sent across borders.

But for the time being, it seems India’s urban residents are more bullish about crypto than its government.

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Source: https://ambcrypto.com/indian-government-cautious-about-crypto-adoption-cbdc-is-a-possibility

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A Deep Dive Into The Bitcoin Wallets Of U.S Congress Members, And Why Bitcoiners Are Strongly Against Them

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A Deep Dive Into The Bitcoin Wallets Of U.S Congress Members, And Why Bitcoiners Are Strongly Against Them

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Key takeaways

  • U.S. Congress’ split disposition towards cryptocurrencies raises concerns among market participants.
  • Bitcoin proponent, James Loop goes digging into the financial disclosures of Congress members.
  • His findings revealed only three Congress members have ever disclosed that they hold Bitcoin.

The United States is a key base for innovation and adoption in the cryptocurrency industry. According to data from Crunchbase, there are at least 1,135 organizations founded in the U.S. that provide various cryptocurrency-related services.

Despite the broad adoption of the asset class by the country’s citizens, the government is still divided on opinions about the growing cryptocurrency industry. This can be seen in the U.S. Congress where members of Congress are split between those who support and those who do not support Bitcoin, the most prominent cryptocurrency.

This polarised disposition of Congress has been a pain point for Bitcoiners. Bitcoin market participants have pointed out several issues that emanate from the fact that there are still members of Congress who have not shown themselves to fully understand Bitcoin.

The sentiment is that Congress members who do not fully understand the asset, having not used it, should not be responsible for making laws about it. Additionally, market participants also think it will be a conflict of interest if members of Congress who oppose Bitcoin are found to be holding Bitcoin or if those who support it do not own any. 

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Jameson Lopp, the co-founder, and chief technology officer of Casa – a leading provider of Bitcoin self custody solutions, has gone digging into the United States Senate Financial Disclosures portal. The investigation was carried out to identify Congress members who have declared holdings of cryptocurrencies, and Bitcoin in particular, in their portfolios. 

His findings paint a dismal picture as the majority of the members of Congress who have been vocal in supporting Bitcoin have not held the asset at all according to their financial disclosures for the year ending 2020.

According to his findings, only 3 Congress members have disclosed that they own Bitcoin. The now-retired Representative Bob Goodlatte of Virginia was the first Congressman to disclose the ownership of Bitcoin, doing so in 2017 even before laws were passed to make disclosure mandatory. According to his disclosure, he owned between $1,000 and $15,000 of Bitcoin at the time.

Among currently seated Congress members, only Senators Cynthia Lummis and Pat Toomey have reported Bitcoin holdings in their portfolios in 2020. Senator  Lummis reported owning $100,000 – $250,000 of bitcoin in 2020 making up between 0.6% and 2.75% of her net worth. Similarly, Senator Pat Toomey reported purchasing $1,001 – $15,000 of GBTC in June 2021. The GBTC investment is between 0.01% and 0.7% of his net worth.

The sleuth however concedes that he did not have the time and resources to go through the financial disclosures of all 535 congressional members. Nonetheless, it is telling that of the ones he checked, even members of caucuses in Congress that are affiliated to cryptocurrency and members that have drafted bills that will provide clarity for the industry do not hold Bitcoin or other cryptocurrencies as their financial disclosures show.

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Source: https://zycrypto.com/a-deep-dive-into-the-bitcoin-wallets-of-u-s-congress-members-and-why-bitcoiners-are-strongly-against-them/

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China Again? — Why The Crypto Market Lost Over $300 Billion In Hours And What To Expect

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China Reemphasizes It's Not Yet Done With Clamping Down On Bitcoin

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Key takeaways:

  • Crypto-market records over s$1 billion worth of Crypto liquidations in hours. 
  • Liquidated long positions significantly surpass shorts.
  • Fundamental factors pose serious threat to the market, but the road to recovery is near.

The crypto market has been hit with yet another massive liquidation. Within the last 24hrs, a whopping $1.03 billion worth of long and short positions have been liquidated, as reported by the aggregate derivative exchange platform ByBt.

When traders are long on a particular asset, they are simply gaining exposure to the cryptocurrency in question, in hopes that prices will surge significantly at a later time. It appears that a lot of investors were bullish on crypto for the most part, as long positions were significantly higher than shorts. Precisely $946.10 million worth of crypto was liquidated, while $6.56 million short positions were liquidated.

Liquidations usually take place in the crypto market when a trader’s leveraged position is forcefully sealed by an exchange when the trader’s initial margin is partially or totally lost. Futures and margin trading is usually where liquidation is common.

Many market pundits have warned against over-leverage, which they point to as the case of repeated liquidation. However, despite cryptocurrencies being high-risk due to the intense volatility, leveraging provides an opportunity for investors to generate significant profit. For this reason, liquidations are imminent.

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On a larger spectrum, the question at hand is how the market will be affected going forward. Although no one can accurately predict, recent events hint that the dip could go even deeper, no thanks to fundamental factors like the ongoing Evergrande crisis.

“The Hong Kong stock market plummeted, triggering a decline in global markets and cryptocurrencies. The main reason is Evergrande, China’s largest real estate company with nearly 2 trillion debts.” wrote Chinese journalist Colin Wu.

Thus far, leading assets like Bitcoin, Ether, Solana, Cardano, and many others have dropped in price value and are, at this time, still going downwards. Bitcoin has plummeted to $42,928. While losing more than 7% in value today. Ether, XRP, SOL, DOGE, and Cardano are likewise seeing an extensive decline.

In response to the dip, analysts have responded to their previous sentiments on Bitcoin especially, saying that the expected floor price for this month remains at $42,000 and that a bounce will follow a while later. Altcoin analysts are also keeping their fingers crossed to see how the next 24hrs play out before predicting the market’s trajectory.

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Source: https://zycrypto.com/china-again-why-the-crypto-market-lost-over-300-billion-in-hours-and-what-to-expect/

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