Blockchain Technology & Its Tremendous Influence on
Finance & Investment
Advanced technology and digitization have spread their magic throughout the
world like the Midas touch – they transform literally any sector they touch.
And today, there’s hardly any domain that remains unaffected by the conspicuous
influence of this technological revolution.
In the modern world, technology is no longer limited to a machine constantly
manoeuvred by manual effort. Today, the disruptive technologies of machine
learning and data science have paved way for self-reliant technological
processes that actively imitate human behaviour and perform the required
functions with minimal assistance. So, where do the finance and investment
domains figure in this advancing world?
With the advent of online banking and crypto
currency, monetary transactions can now be performed at the click of a button.
Leveraging the principles of cryptography to organize comprehensive sets of
data, the blockchain technology has
already begun to exercise a massive influence on modern transactions. So, it’s
time to take a look at what blockchain technology is all about and its various
implications in finance and investment:
Blockchain Technology Mean?
Blockchain is a comprehensive data system
that consists of interconnected data units or “blocks”. These blocks use cryptographic
principles to store information entered by individuals at different stages. These
software systems are typically not owned by a specific individual or entity, which
provides a secure repository for different fragments of information to be
documented. Every piece of data is encrypted in the system in the form of a
“hash”, which is a unique identification code used to store the information. The
different fragments of information entered at various points in time are connected
together using these principles.
Relevance of Blockchain in Investment
While blockchain is still a relatively
budding concept in the field of investment, it is steadily being recognized by
stalwarts in the sector for its potential to eventually bring about a positive
transformation in the financial processes. Here are some ways in which
blockchain technology is influencing the investment sector:
safer transactions: As more and more data is
generated on a daily basis in our digital worlds, the need of the hour is to ensure
that all the information is securely stored in the database. The transparency
provided by blockchain technology ensures that there is a systematic record of
all transactions. This substantially aids in preventing fraudulent transaction
activities, especially since the codes are verified by different miners around
property and other insurance claims: Property
insurance and other insurance claims are often extremely time-consuming, albeit
necessary. However, processing these claims also involves wading through a
massive collection of data, which can be a cumbersome exercise at the backend. Leveraging
blockchain to process insurance claims can help to store this data efficiently
while also reducing manual effort.
in Bitcoins: One of the most significant ways in
which blockchain has established itself in the modern finance scenario is
through Bitcoins, which are popular investment
strategies today. The USP of Bitcoins is that this technique is not centralized
or monitored by a governing body. However, this aspect can also cause these
investments to be riskier in comparison to other investment securities such as
government bonds, ETFs and even equities.
The investment and finance sectors have
always had the multi-fold responsibility of helping investors alleviate
investment risks and reap the benefits of maximum returns. However, excessive accumulation
of data and the necessity to document information can considerably slow down
the process and bog down the staff at the backend. Blockchain technology offers
an efficient and standardized means to maintain large annuls of information, so
that it is a win-win situation for investors and traders as well as stock
brokerage firms, investment advisors and other entities from the domain.