Blockchains are decentralized systems for recording and documenting transactions involving a particular digital currency. In simple terms, blockchain can be viewed as a distributed record of transactions, like a traditional ledger in accounting. However, the scope and application of blockchain technology is not just limited to the financial sector. The transactions can record the transmission and exchange of goods, information or even secure data.
Information stored on a blockchain can be perceived as a shared database. The blockchain database is stored across multiple locations such that they are available publicly and remain easily verifiable by multiple parties. This prevents the stored information from being hacked or corrupted.
While blockchain technology is still evolving, some major advantages of this revolutionary technology include
The financial sector has been the most common use case for blockchain technology. According to a report by the World Bank, in 2015 money transactions worth over $430 billion US dollars were recorded. In 2016, ICICI Bank announced that they, in association with the Dubai based NBD, successfully performed transactions in international trade and remittances using blockchain technology.
Besides, the digital wallets and payment apps which people use to transact with Bitcoin or any other cryptocurrency are also examples of blockchain technology.
Amongst other advantages, the chief feature of blockchain technology is that it facilitates two parties to execute a transaction without the need of any mediation. And for the financial institutions, it ensures them to perform and authenticate transactions independently without any manual interference.
This electronic ledger of transactions is continuously monitored, maintained and verified. And using cryptography, such incorruptible ledger is shared across network.
Experts are of the opinion that blockchain technology can substantially lower the costs and reduce inefficiencies and human errors, especially in the financial sector.