Blockchain is a hot topic discussed everywhere today. It is not a new invention, maybe just comparatively new, and yet not many people understand how it works and why experts are so interested in it. Most professionals in the IT and finance industries call blockchain the technology of the future and some state that it can totally change the world, at least the world of finance for sure. And yet, blockchain is still not fully researched, it stirs questions from potential investors, which slows down its further development. So, why is blockchain called the technology of the future, and how can it change the world we live in?
Blockchain is only a few years old and not every blockchain lab has already fully managed it, and yet it managed to put many industries on toes, especially the banking sphere. The main reason why blockchain can be used as a banking system, for transferring finance from one party to another. However, in contrast to the modern banks, it can be done with the help of the new technology without any commissions, without machinations with currency rates, and in total anonymity. While the last aspect can be a problem, because as governments state, criminals can use blockchain to launder money, all other aspects benefit the user and harm the banks.
Transfer commissions and currency rates differences are those things on which banks make money when the users simply transfer finances. This does not take a bank clerk to go and bring that money from one place to another, yet the bank charges commission. Some banks charge even if the client transfers money from one of his accounts to another one, and the commission is not fixed but depends on the sum. Many users do not find it fare.
Currency rates are an issue on which banks can speculate heavily, of course, not to the benefit of their clients. When the Client wants to exchange the currency from one foreign currency into another one, the bank makes the double exchange by counting the first currency in the value of local currency, and then the other foreign currency is exchanged from the sum in the local one. With all these machinations, the clients lose their money, and the bigger the sum, the more they lose. Blockchain, on the other hand, can transfer the amount given without any exchange.
Anonymity is the next issue the banks are worried about. On the one hand, criminals like terrorists are able to use blockchain to launder money or exchange data and money and nobody knows who are the parties of the transaction. On the other hand, in some countries, there is no total security of banking operations, so some users become victims of the hackers. The governments also allow to check the citizens’ accounts to make sure nobody has bigger amount of money that they state in their income declarations. However, most users believe that this is a violation of their privacy. Blockchain prevents such checks and violations on the part of the authorities.
All these opportunities offered by blockchain technology will make the banking system transformed and the future banking system will be totally different.
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