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Influence of blockchain technology on finance24 December 2019

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:

What Does 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.

The 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:

  1. Ensuring 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 the world.

  2. Managing 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.

  1. Investing 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.

Conclusion

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.

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