The Block Chain Basics – Guide To Understand Blockchain in Fintech – 2023 in 10 Minutes.
Intro of Blockchain Fintech Solutions
We’ve been hearing of Blockchain fintech solutions a lot. In 2023, it is becoming more important than ever. According to a report by Deloitte, 88% of senior executives think that blockchain technology has started to become mainstream.
This blog post is written with the objective of explaining Blockchain technology in a simple manner. The objective of this blog is to explain the concept in a way that a 10-year-old can understand.
So then Let us start without any delay.
First Things First. What is Blockchain in Fintech?
In the simplest words, “Blockchain fintech is like a technology. It helps people do money stuff in a safe and fair way. It’s a lot like a special digital ledger or a big list of transactions. The unique thing is that everyone can see and agree on it. That’s the reason why it is becoming such an important technology to have. In a survey, 39% of senior executives from around the world said that they have adopted blockchain technologies in their organizations. In fact, 41% of these companies had a revenue of more than $100 million
For e.g Imagine you and your friends have a special notebook. You write down all the money you give or receive. Now, think of blockchain as a super notebook. It’s online and everyone can see it. Whenever someone gives or gets money, it’s recorded in this big online notebook.
This special notebook is super safe. It uses something called cryptography. What does it mean? It means the information is locked up in a secret code. The people with the right key can unlock and read it.
With blockchain, people can send and receive money directly to each other. The best is that they don’t need a bank or a middleman. It’s like sending a text message, but with money instead!
Blockchain fintech is changing the way we do money things. It has made things faster, cheaper, and more secure. In some cases, it is making banking and finance fairer for everyone.
How The Heck Blockchain is Becoming So Important?
Blockchain is important in fintech solutions because it makes money move valuable. It’s like a superhero for money! It helps keep things safe, fast, and fair. That’s exactly why, an impressive 81% of the world’s top 100 public companies by market capitalization use blockchain technology.
- Every year, lots of money is lost or stolen. But with blockchain, that’s changing. It keeps a record of all transactions. Whether buying things online or sending money to friends. This makes it hard for bad guys to cheat or steal. Thus, let’s say blockchain is making your money safer.
- Not only that, but blockchain is making things faster. It’s like sending a message instantly. When you buy something online, you usually have to wait for the payment to go through. But with blockchain, it can happen in seconds!
- Blockchain also helps make things fair for everyone. Sometimes banks or middlemen take a lot of fees when we send money. But with blockchain, we can send money directly to each other without those extra costs. That means more money stays in our pockets!
Owing to the above three reasons there’s a shift towards blockchain. Big companies like E&Y are already using blockchain to make their businesses better. No brownie points for guessing, Microsoft, Amazon, J.P. Morgan, Walmart, Alibaba, PayPal, Samsung and the Bank of China are among the 27 companies with a fully functioning live blockchain product.
So, to sum it up, blockchain is important in fintech solutions because it keeps our money safe, makes transactions faster, and helps us save money. It’s like a superhero that fights for fair and secure money for everyone!
Still not able to Understand the Key Difference Between Fintech and Blockchain? No Worries. Read This.
FinTech and blockchain are related, but they are not the same thing. FinTech is like a big umbrella. It covers all the cool technology that helps with money things. It includes things like apps on your phone that let you pay for stuff or check your bank balance and much more.
On the other hand, blockchain is a special technology within the Fintech solution domain. It helps make money things more secure and fair.
In recent years, both FinTech and blockchain have become really popular. According to a study by Ernst & Young (E&Y), the use of FinTech has been growing rapidly. In fact, it is predicted to keep growing.
Now, even though blockchain is a part of FinTech, not all FinTech use blockchain. There are many other technologies and innovations in FinTech that don’t involve blockchain.
Think of FinTech as a toolbox full of different tools. Blockchain is just one of those tools. It’s like having a toolbox with a hammer. However, there are other tools like a screwdriver or a wrench also.
So, to sum it up, FinTech is all about using technology to make money things better. On the other hand, blockchain is a specific technology that helps make money things more secure and fair. They are related but not the same thing.
Easy? Let’s dive deeper!
Key Advantages of Blockchain Specifically in the Finance Sector
Blockchain has many advantages in the finance sector. Apologies if I am sounding a little repetitive. However, it is important to look at the definitions specifically from the perspective of the Finance domain. Almost 80% of global executives in the finance sector view blockchain as “very important”.
- Security – Blockchain keeps money safe from bad guys. Ernst & Young (E&Y) says it’s hard for them to cheat or steal.
- Speed – Blockchain makes money transactions happen fast. It saves time and is efficient.
- Transparency Everyone can see and trust the transactions on the blockchain. E&Y predicts transparency will be the most important factor in finance.
- Cost savings – Blockchain reduces fees and costs. This alone saves billions of dollars, says E&Y.
- Innovation Blockchain brings new ideas to finance.
So, blockchain is like a superpower for finance. It protects money, makes things fast and fair, saves money, and brings innovation.
Interesting Blockchain Use Cases in Fintech
Blockchain technology has many important uses in FinTech solutions.
- Payments and Remittances Blockchain helps make sending and receiving money faster and cheaper. It’s like a super-fast and safe way to pay your friends or buy things online.
- Smart Contracts Blockchain can create contracts that follow the rules automatically. It’s like having a robot that makes sure everyone does what they promised.
- Identity Management – Blockchain can help keep our personal information safe. It lets us control who sees it. It’s like having a secret lock that only opens for the right people.
- Supply Chain Finance Blockchain helps keep track of things we buy and sell. It makes sure nobody cheats or lies about where things come from.
- Insurance Blockchain can make getting insurance easier and faster. It helps companies handle claims quickly and makes sure everything is fair.
- Asset Tokenization Blockchain can turn things like houses or art into special digital tokens. It’s like having a special coin that represents ownership of something valuable.
- RegTech and Compliance Blockchain helps companies follow rules and laws. It keeps a record of all the important things they do, so they don’t get in trouble.
Top 10 Most Popular Blockchain Products in the World.
(A) Ethereum – is known as the pioneer of smart contracts. Ethereum is a decentralized platform that enables developers to build and deploy decentralized applications (DApps). It has its cryptocurrency called Ether (ETH) and hosts a vast array of projects and tokens.
(B) R3 Corda – Is designed specifically for the financial industry. Corda is a distributed ledger platform that focuses on privacy and scalability. It allows businesses to transact directly, streamlining processes and reducing costs. It is done by a leading Fintech App Development Company.
(C) Hyperledger – Hyperledger is an open-source collaborative effort hosted by the Linux Foundation. It aims to create cross-industry blockchain solutions. Hyperledger Fabric is one of its popular frameworks. It provides modular architecture for businesses.
(D) EOSIO – EOSIO is a blockchain platform. It is known for its high scalability and performance. It supports the development of decentralized applications. It offers features like fast transaction speeds and low fees.
(E) ConsenSys Quorum – Quorum is an enterprise-grade blockchain platform based on Ethereum. It focuses on privacy and permissioned networks. This makes it suitable for business use cases.
(F) Avalanche – Avalanche is a decentralized platform that aims to provide high transaction throughput and low latency. It employs a unique consensus protocol to achieve scalability and security.
(G) Cardano – Cardano is a blockchain platform that emphasizes security, scalability, and sustainability. It aims to provide a secure infrastructure for the development of financial applications.
(H) Chainalysis KYT – Chainalysis KYT is not a blockchain platform itself. It is compliance and investigation software. It helps businesses and law enforcement agencies monitor and analyze cryptocurrency transactions for regulatory compliance. It is done by a very interesting Fintech App Development Company. I’ll love to discuss the same in future blogs.
(J) IBM Blockchain – IBM a Blockchain development company offers a comprehensive blockchain platform that caters to various industries. It provides tools and services for creating, deploying, and managing blockchain networks.
(J) Polkadot – Polkadot is a multi-chain platform built by a Fintech App Development Company. It enables different blockchains to interoperate and share information. It aims to create a scalable and connected blockchain ecosystem.
blockchain technology has a significant impact on various sectors. The impact is visible in finance, capital markets, and supply chain management areas.
It offers many advantages. Some eg are enhanced security, increased transparency, faster transactions, cost savings, and innovative possibilities. Blockchain ensures the integrity of transactions. Thus, it makes it difficult for bad actors to cheat or steal. It also simplifies processes, eliminates intermediaries, and fosters trust among participants. As a result, blockchain is gaining momentum.
However, it’s important to be aware of certain threats associated with blockchain. Security risks, scalability challenges, regulatory concerns, energy consumption, and lack of standards are factors that require attention and continuous improvement.
Overall, blockchain technology is a powerful tool. It is bringing positive changes to various industries. It revolutionizes the way we handle transactions, contracts, identity management, and more.
As blockchain continues to evolve and overcome its challenges, it holds the potential to reshape the future of finance, capital markets, and supply chain management.
By staying informed and embracing responsible practices, any Blockchain development company can harness the benefits of blockchain while addressing its associated risks.