Bitcoin is in the news again. This is a widely talked-about concept that aims to change the way you manage your money. According to experts, one of the biggest impacts that it is going to have will be on the finance sector. Before we go any further as to its effects on our life and money, let us understand what Blockchain, Cryptocurrency, and Bitcoin are in a bit of detail.
Cryptocurrency – By definition, it is a digital currency that Is considered highly secure and verifiable. There are several encryptions in place that regulate the generation of individual units and also verification of the transfer of funds of a cryptocurrency.
Blockchain Technology -Blockchain is a technology in which all the transactions made in digital currencies are recorded. It is a system of ledgers that can record digital currencies chronologically and publicly. It can be used for a plethora of purposes and applications. Blockchain facilitates tracking of ownership provenance of documents, verification of the ownership and genuineness of digital assets, physical assets, and more.
Bitcoin – Bitcoin is a type of cryptocurrency. It also operates on the same encryption technique mentioned above. Satoshi Nakamoto is believed to be the creator of Bitcoin which is an unregulated digital private currency. A regular currency has an underlying asset or value base which makes it widely acceptable all over. Experts believe that cryptocurrency will soon replace these legal and widely accepted currencies despite not having that feature. Does this mean that you’ll be heading to a bitcoin ATM soon instead of a regular one? Well, this is something that only time will tell but for now, let’s see how this technology impacts our finances in the present.
- Banking Services Redefined
Blockchain technology today has the potential to disrupt the banking service as we know it. From payments to settlement systems to clearance, everything is going to evolve with the advent of cryptocurrency. We have understood by now that blockchain is a highly digitized and secure ledger system. It is 100% legit and can make our existing banking systems far more accurate.
JP Morgan Chase has already entered the blockchain space intending to facilitate transactions between institutional accounts. Facilitating payments will prove to be highly profitable for banks and this is why institutions such as Goldman Sachs and CitiGroup too have also begun experimenting with this technology.
- It’s All About Stock Trading, Honey
Blockchain Technology today promises to make the process of buying, selling, and trading stocks much more secure and faster. The correlation between bitcoin and stock markets is only going to grow stronger in the future. This tech will bring about a higher degree of automation all the while increasing transparency and auditability. The existing trading processes that we follow have longer settlement times and inadequate security measures in place. Bitcoin, cryptocurrency and related concepts will soon disrupt this trend. Integration of cryptographically secured distributed ledgers will bring about the much-needed change here.
- Crowdfunding Can Be Fun
What if there was a way to fund your project in the most secure and guaranteed way? This is what the crowdfunding industry needs at the moment. The backers, also known as pledgers can now invest in creators and entrepreneurs to fund their dream projects with more security. The blockchain-powered crowdfunding process is quite similar to how public limited companies sell their stocks in the traditional stock market. It is called the initial coin offering in which a company sells its cryptocurrency-backed tokens and the benefit goes straight to the entrepreneur/creator.
A very popular example of such a company is Pledge Camp. The enterprise aims to enhance transparency with the use of smart contracts. The entire funding process is decentralized and as the individual projects reach their target funding, the entire money is transferred to a highly secured escrow wallet. This makes it easy for the creator to withdraw funds gradually.
- What About Your Will and Inheritance?
The various benefits of smart contracts and their applications come to the fore when we talk about wills and inheritance. The way blockchain smart contracts provide solutions to verify the intentions of the deceased is practically revolutionary. The timely application of blockchain tech enables you to manage will-related litigations and various challenges related to the genuineness of the will as well. These challenges cannot be eliminated but it will make it easier to identify factual information related to the last wishes of the deceased. Smart contracts also help in creating self-executing will systems that automatically distribute the assets of the testator and eliminate the need for any executors and court battles.
- Accounting Like Never Before
The accounts and final books of any organization/enterprise contain a lot of sensitive data. The accounting industry is also on its path to adapting cryptocurrencies and blockchain technology. This could bring about more security and automation at a much larger scale. By incorporating the many features of artificial intelligence along with this ledger system, several accounting firms have already initiated data tracking and automation of their various accounting services.
- Loans and Credit Anyone
Do you remember how Equifax was hacked in September of 2017? the sensitive credit information of close to 150 million Americans was exposed. Blockchain Technology eliminates all such risks. It is a more affordable and very much efficient way of making loans and credit available to a broader spectrum of consumers. The entire process is going to be highly decentralized and cryptographically secured.
Bloom is already working on bringing credit scoring to the blockchain as we speak. With a decentralized registry of historical payments, it will be easier for a consumer to apply for a loan based on their global credit score.
- Insurance with Encryption
Blockchain tech also promises to enhance the operational efficiency of the insurance sector. It could significantly reduce the processing time and costs for various insurance companies. Instead of focusing on developing new products or innovating their existing offerings, insurance companies can now increase speed to market and provide better customer experiences with the help of this technology.
It might be a little difficult for everyone to wrap their head around the concepts of cryptocurrency and blockchain. People have more often than not called them a fraud and a total fad. But as the trends suggest, they are anything but that. They are the future of not just the finance sector but agriculture, mining, retail, entertainment, healthcare and infrastructure, and many more. Bitcoin and blockchain technology are going to be our tomorrow. They are here to stay.