Today there is no doubt that crypto-assets and blockchain technology will soon become a basis for various forms of financial instruments and services. Just in a few years, it will probably be hard to imagine money transfers, contracts, record keeping, and settlements without this new technology.
As it attracts more and more attention from business owners all over the world, the future transformation of the financial sector becomes inevitable. It is hard to argue that crypto-assets on the blockchain are an ideal solution for the challenges that the financial field was facing from the very beginning. Blockchain has the potential to reduce transaction costs and speed while increasing the trustworthiness and reliability of the process.
It is not an exaggeration to say that blockchain technology is a step in the right direction, a step toward a new financial system with opportunities for everybody. A lot of people today do not have access to financial services due to high costs, economic instability, or other problems, but it can and should be changed.
Benefits for the Financial Sector
The benefits of blockchain are plenty. From decentralization, when all transactions are available and confirmed by other participants of the network, to cheap direct payments, when you avoid banks or other financial institutions that stall and make the process more expensive.
Sending money across borders is yet another area that needs a major improvement because despite customers transmitting billions of dollars from country to country every year, the process remains cumbersome and expensive. Blockchain technology offers an alternative way to send and receive money transfers. This idea saves time and money not only for banks, but for their customers too.
The widespread use of smart contracts will deal with a variety of problems, like monitoring payments and closing deals automatically. As an unbiased third-party, smart contracts can pave the way toward automated lending decisions. And low costs can revitalize the financial market and make it more competitive, allowing small companies and startups to compete against big financial institutions. And for the customer, it can mean that instead of needing a lot of money and a regular income, all you will need is a smartphone and internet connection. Also, let’s not forget about the fact that blockchain technology is resistant to hacking and other forms of fraud.
As the technology continues to evolve, we can confidently highlight an extensive list of the possible benefits that are available today:
- Security. Distributed architecture reduces the need for transfer agents and the possibility of failure of the system as a whole;
- Trust. Incorruptible ledger allows different parties to collaborate and reach agreements with more confidence;
- Programmability. Tamper-proof software that can automate business processes increases efficiency;
- Privacy. It enables selective sharing of data in a business network, that improves trust while maintaining confidentiality;
- Transparency. Standards and protocols act as a shared source of verification for all network participants;
- High-Performance. A network is designed to sustain thousands of transactions per second.
All the benefits mentioned above force key industry players to look for a way to adopt a new operating model for finance. And that is why it is no surprise that key banks are teaming up to create a new form of digital currency. According to some estimates, approximately 66% of banks are expected to start using the technology during the next year.
Blockchain applications for fintech continue to steadily take over the industry, while financial institutions are rushing to integrate the emerging technology into their current business model and benefit from it.
Have We Ever Thought About Crypto Endgame Scenarios?
Well, we did, and they all seem rather unconvincing. But if we would have to pick, state-backed cryptocurrencies running on state-owned networks would be our choice. In this particular scenario, the financial revolution will die out, and the state will rip all the benefits. But there will probably be no endgame for the crypto. The technology will continue to evolve, the same as the fight between the state and the free men.