The implementation of the blockchain technology in the financial sector is one of the most promising areas for investments.
The experts of Forbes agree that the FinTech industry will attract more than $17 billion of direct investments.
Traders, brokers, experts from Wall Street and representatives of economically developed countries share the view that Blockchain will become the foundation of a new financial model.
One of the first tools is “smart” contracts that are applied to the transfer of ownership or assets. Moreover, all interested parties are confident in the reliability of each transaction. The possibility of outside interference is reduced to zero.
High demand mechanisms
The second popular tool is tokens / cryptocurrencies. Both are used to show particular company’s shares or fractions of shares.
From a practical point of view, all operations are conducted without intermediaries. As a result, risks and unjustified losses are eliminated.
Peer-to-peer (P2P) networks are another tool for working with financial technologies. Thanks to a full tier 1 network, all transactions are conducted without the risk of hacking and outside control. The ability to reduce transaction costs is a benefit of this tool too.
Benefits of Blockchain
A multilevel mechanism of security check (so-called consensus mechanism) means that the user may not only control the information flow but also can exclude the possibility of its duplication. A high result is obtained thanks to the following 4 parts that each block has:
- A unique hash number that includes a unique set of digits
- The hash number of the previous block
- A list of operations included in the block
- Public keys of the recipient and the sender.
Every consensus mechanism is organized in such a way as to take several times less time. Whereas previously users had to wait for confirmation from a third-party authority, for example, a bank, now verification is faster without compromising quality.
The security issue is related to protection against criminal offences or cyberattacks. Nearly all DDoS attacks are aimed at the central server. As soon as it goes down, transactions become impossible.
In this regard, the blockchain is 100% protected from those cases because it does not have a single center. In other words, it’s decentralized.
In addition to the already mentioned, the system, among other benefits, has the following details:
- Transparency: no one can somehow correct or change the transactions. That will always be a new transaction instead;
- Only the user with delegated rights has access to the information in the block;
- Elimination of intermediaries in ongoing operations reduces operating costs of individuals or legal entities that participate in the transaction.
Promising areas of use
The involvement of financial robo-advisors is the opportunity to be consulted in real time on resource and money managements.
If earlier such consultations included a lot of so-called “human factor”, now the level of professionalism became higher.
Blockchain’s advisers analyze an impressive amount of data and provide clients with objective information.
The second perspective area is the management of a voting procedure. It is concerned with both decisions made within companies and traditional plebiscites.
Analysts say about much more promising areas for the joint action of Blockchain and FinTech:
- An issue of shares. Now they can be issued in electronic form ensuring that the reliability of every single share is increased;
- Distribution of dividends;
- Optimization of the verification process. A database characterized by a linear organizational structure allows storing any information;
- Making international payments. Now it is possible to refuse the assistance of intermediaries that result in reducing service costs and increasing the speed of transactions.
Acquisition of new customers: even in the 21-st century not everyone has access to basic financial instruments.
The implementation of Blockchain in this area allows providing the basic financial services at a minimum cost. The reliability level of each mechanism is not even questioned.
Experts appeal not to stop
The Forbes’ analysts constantly explore the market changes. The collected information is used to create a list of the most promising FinTech companies.
They focus on legal entities which are directly related to the cryptocurrency and Blockchain. Leading positions are occupied by Ripple, the Bitfury Group and Coinbase.
The following top 9 positions are given to companies that are specialized in the development of software that analyzes ongoing operations. It was not surprising that some of them were bought by intelligence agencies.
The list is supplemented with mobile applications that allow trading on stock markets.
They are conventionally divided into simpler apps for users and professional ones.
The first instance, it is software that does not charge commissions while trading cryptocurrencies.
Professional mobile applications help to conduct international payments to business entities.
Integration of financial instruments and Blockchain open huge prospects: reducing costs and increasing safety.
Now all participants of the transaction are not afraid that related information will be revealed to any third parties. And the high speed of operations is a pleasant bonus.