Fintech companies are gearing up to ride on blockchain and expand their portfolio after the huge growth of digital payments in 2017. As a result, blockchain technology will be leading this fintech revolution in 2018. Several governments are warning the enthusiasm around Bitcoin and also refusing to recognize the crypto-currency legally. On the other hand, the banking sectors are employing this blockchain technology.
What is blockchain technology?
Essentially, a blockchain is an online ledger which simplifies the way of transactions by using a data structure. This allows users to manage the ledger in a secure way without any third party assistance. A bank’s ledger is connected to a centralized network and the blockchain anonymously protect the identities of the users. Thus, it makes a much secure way for transactions. Also, blockchain algorithm reduces the dependence on people to verify the transactions.
How does blockchain technology work?
Basically, blockchain is a distributed database which takes various inputs and places them into a block. Each block is linked to the next block which makes it chained using a cryptographic signature. Thus, blockchains will be used as a ledger which can be accessed by anyone. The ledger is termed ‘permissioned’ if everyone in the process is pre-selected and the ledger is not permitted if the process is open to the whole world.
Blockchain technology in Banking and other applications:
While the blockchain technology is not just confined to the financial sector, it is being employed in many other areas. For instance, Honduras government has put all land records on a blockchain. Every change in the ownership will get recorded publicly in the public ledger.
Security exchange firms are also making their way to make use of blockchain. Recently, the Australian Securities Exchange (ASX) announced that it would move Australia’s equities clearing and settlement system on to the blockchain.
Besides that, back in October 2015, Nasdaq unveiled a solution which enables private companies to represent share ownership digitally. This was named Linq and is build based on the blockchain technology.