Banks and governments consider blockchain companies a threat and with good reason. Traditional banking has limits that can make investing and transacting a hassle.
For instance, traditional banking is subject to fees and policies. This can make it hard to do business abroad or using currencies other than fiat money. Moreover, financial agencies are not infallible. Even with advanced security measures, fraud and other issues plague many banks.
These limits and problems do not affect blockchain platforms and currencies. In fact, blockchain helps people manage their finances.
How Blockchain Allows People to Become Their Own Bank
Blockchain gives people full control over their finances. Moreover, it does this in a way that disrupts the old-fashioned banking industry. Here is how:
Removes the Need for a Middleman
Blockchain technology companies can develop banking platforms that run on a decentralised ledger. This gives people a way to agree to a database without using a mediator.
How do these platforms ensure that everyone involved in a transaction will follow set deals? They use smart contracts. These self-executing contracts hold the people involved accountable to the terms they agreed on. In short, they have the potential to automate manual banking processes.
Thanks to smart contracts, people can buy, sell, invest, and trade safely and confidently on their own. As a result, they can stop relying (or at least limit their dependence) on middlemen like banks. In addition, they can take off transaction fees and other costs from their banking budget.
Improves Securities Processes
To buy or sell assets like stocks and commodities, investors must keep track of who owns what. This can get tricky, especially in digital transactions. Asset management involves a lot of people, which can make it hard to determine who is handling what.
Blockchain companies solve this issue by removing the need for a middleman in securities processes. As a result, people can take full control of their investments. The technology also makes global markets more accessible and reduces asset exchanges costs. In fact, experts estimate that transferring securities to the blockchain can save up to $24B per year in trade processing expenses.
Simplifies Cross-Border Transactions
Countries have different currencies, which can complicate cross-border transactions. Costs and documentation processes vary and take time. These setbacks can make banking across borders hard, especially for urgent matters.
Blockchain technology removes these obstacles without risks of fraud or compromising confidentiality. There are platforms that allow users to track everything about their transactions, imports, or exports. Also, people can use the technology for tokenised payment upon their products’ receipt or delivery.
Companies That Are Pushing the Banking Industry into the Future
Blockchain technology is the future of banking. In fact, many companies are developing blockchain platforms that can transform the industry. Here are some of the most promising ones to date and how they are using blockchain:
- Jibrel Network – a banking solution that tokenises assets, such as loans, commodities, and ICOs
- Paxos – a trust that uses a decentralised ledger to settle assets and payments
- Salt Lending – a company that lets members back their loans with crypto
- Uulala – a platform that allows peer-to-peer banking for various banked sectors
- Blockfi – a platform that uses crypto as collateral when loaning dollars
Blockchain Technology: Transforming Financial Management
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