We haven’t seen a technology that could change so many industries like Blockchain promises to, since the internet. People call Blockchain internet 2.0, meaning that we’re on a new step of developing our daily lives, work and how we handle everything around us.
We’ve seen disruptive technologies before. Digital photography transformed how we take, use and store photos, and we witnessed, Kodak, a brand once seemingly impenetrable, become irrelevant.
Now it’s time to change the banking system
The banking industry is facing a technology that could make it unrecognizable to those from the past. That technology is blockchain.
Initially, the industry largely ignored it with some ridicule. JPMorgan Chase CEO Jamie Dimon, one time described Bitcoin, blockchain’s first successful application, as ‘a fraud.’
Over time, however, banks seem to have embraced the technology. Hundreds of major banks are involved with blockchain projects like Hyperledger, R3Cev, and Ripple, hoping to change the way international transactions work.
But why is blockchain the most disruptive technology the banking industry is likely to ever face?
It opens up new possibilities
It is the first technology to allow complete sidestepping of conventional banking. For centuries there was hardly a way to avoid banks.
Blockchain facilitates peer-to-peer transactions at negligible costs.
The technology also creates the right environment for the growth of what could be considered to be a real alternative to central banking. And this is where we find P2P lending platforms like AssetStream.
It is essential to point out, however, that, blockchain provides alternatives to the central banking, and offers tools that traditional banks can use to modernize themselves and meet the needs of the 21st clientele.
So what exactly does blockchain offer both traditional banking and new models like the P2P on which AssetStream is built?
Bringing transparency to operations
Openness and providing information regarding how banks operate is a critical part of good banking practices. It fosters a sense of honesty and professionalism. But what we learned from the banking crisis of 2008 is that banks keep away from the public data that shows them in a bad light, even when disclosure of that data could help protect consumers.
- The blockchain provides means through which all stakeholders can have access to critical data and most importantly be able to independently audit and authenticate it.
- It makes it possible that a network of stakeholders can maintain the data records through consensus, leaving no room for information about adverse actions being hidden.
- It allows digital data to become immutable. It is essential both in conventional banking as well as new financial entities. Data cannot be arbitrary changed through simple access to servers.
- Transactions can be executed fast, even within seconds, regardless of the amount involved and the distance between the sender and recipient. Contrast this with conventional banking where sometimes it takes more than a week to complete a transaction.
Making data stored, processed and executed on a ledger that everyone accesses and maintains through a peer-to-peer network brings down the cost of financial services.
Meanwhile, this happens with the control of personal data turned to customers. Only they can decide who can see, access and use it. This is possible through cryptography that is part of what blockchain is.
Need more proof?
To experience financial services on the blockchain, join AssetStream, a P2P lending platform with a global reach for lenders and borrowers.