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Can blockchain substitute banking systems?

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Throughout recent years blockchain has become a buzzword among both crypto-involved people and just average net users. The idea of a digital ledger has gained so much traction many experts forecast blockchain to play an integral role in the next technological revolution.

Throughout recent years blockchain has become a buzzword among both crypto-involved people and just average net users. The idea of a digital ledger has gained so much traction many experts forecast blockchain to play an integral role in the next technological revolution.

The most widely-held assumption is that blockchain technology will likely displace the conservative banking system and lay a foundation for digital banking. Although the idea of digital reality sounds very enticing, the view on the possible blockсhain revolution very significantly.

One thing is evident after all: to keep up with the future, banks have to incorporate digital technologies into their operation gradually. For now, this is the only way to stay afloat in the age of high-tech.

What is blockchain?

Introduced in 2018, blockchain is a distributed digital ledger, that maintains linked “blocks” of data. This technology provides a high level of privacy and security, as data blocks cannot be altered once they have been stored. Blockchain began its operation within a decentralized payment system, known as Bitcoin.

Although Bitcoin is the first thing that comes to mind when talking about cryptocurrencies, there are many other Blockchain-based cryptocurrencies and payment systems running nowadays. Ethereum is one of such currencies, which offers extra features, like smart contracts.

So what makes blockchain such a nice alternative to the existing banking systems? 

It makes all traditional banking processes faster and efficient. The traditional banking system has already demonstrated its inability to keep up with the fast pace of the modern world. It is often blamed for its downtimes and loads of unnecessary bureaucracy. In its turn, blockchain offers faster and simple banking processes and excludes any paperwork. You only need some people to approve of the transaction, and the work is done!

Decentralized nature of the technology

This feature means that there is no participation of an intermediary person or third party, which make blockchain a very secure option. It is next to impossible to hack the computer systems and take vulnerable data.

No way to hide vulnerable data

The blockchain technology provides transparent banking and at the same time, prevents any corruption. Since it is impossible to corrupt data in a blockchain, it is claimed to be the most breakthrough innovation in the banking sector.

Optimizing regulations feature

Banking institutions are obliged to comply with KYC (Know Your Customer) regulations and check whether their clients are not involved in any illegal operations. Carrying our KYC operations can turn out quite costly for banks, and the use of blockchain can significantly downsize these service fees and administration fees. The verification procedure can be completed by only one organization and then stored on the blockchain. Thus, any other institution will have access to these data without the need to complete the KYC verification once more.

Now let us take a look at how banks are utilizing blockchain in their activity already.

Such famous world banks as JP Morgan Chase have announced the introduction of the blockchain technology in their operating system. Blockchain’s feature to deliver flexible, transparent, and speedy transactions have brought it to the top ranks of the hottest banking trends.

Besides that, many bank institutions started to invest in growing Fintech companies to support the creation and implementation of blockchain-based systems. For instance, Bank of America has begun a partnership with several fintech companies to build blockchain-based systems. Thus, as a valuable alternative to traditional banks, blockchain technology can be critical in the future of banking technology.

So what conclusion can we draw from these speculations?

The potential of blockchain goes in one stride with the initial incentives of the commercial internet. That is why it is vital that businesses know the main features of innovation and how it can find a solution for data exchanges enabled on the internet. Thus, banks need to find out feasibility identify opportunities and impact, and test proof of concepts.

For instance, Metahash crypto platform is an example of a startup which strives not only to provide speedy and cheap crypto-transactions but also establish a decentralized international network. The developers claim that such network will be able to process data on a large-scale, global basis quickly. In its operation, Metahash ticks all the boxes an innovative platform needs to fulfill.

First, it provides full decentralization and all the benefits deriving from this.

Second, Metahash processes transactions within three seconds. Metahash developers’ team are sure that the longer a transaction takes, the less easy it is to utilize the system, and more difficult for the whole platform to operate in full capacity.

Metahash provides low transaction prices, which encourages more potential customers to use the platform to conduct their financial transactions and store digital assets.

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