Blockchain is a robust technology, it allows each owner to transfer an amount of money directly from person to person without the requirement of central authority or intermediaries. It is a technology underlying Bitcoin. Every transaction block set with its own hash value, which entitled a transaction finder with a set of inputs and outputs. A block in a blockchain network can store the details about who is involved in the transaction, date, and time etc. instead of your actual name, you can use a ‘digital signature’ like unique username. All blocks in a network have the history of all transactions. By creating a block, one person to a transaction starts a process and the block then verified by distributed computers around the net. The verified block stores unique history and record and it is added to a chain. We cannot alter the data in a block once it updated. Individuals around the world will maintain their copy of records for each blockchain transaction, this record contain details about each transaction. Basically, blockchain technology can eliminates mediators, and individuals can be touch with each other (person-to-person). Which makes very difficult for fraud to occur and the transaction can be do it with cheaper costs.
You cannot know any technology nowadays without considering and knowing, which makes blockchain a hot issue. Nobody has been allowed to make falsification after Bitcoin emerged into market, which shows how robust this technology is. As it is an open-source structure it gives a transparency to the users, which means that other users of the network can read and confirm the information. For example, when you want to transfer the money through western union to another person, this will charge some amount as a transaction fee and it will take several days depending on the amount. By using blockchain the transactions are quicker and secure. This will not charge any transaction fee. The technology has been developing gradually over the last few years, initially from Bitcoin and then Ethereum. In the following sections we will study the history and current view of the blockchain technology.
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Historical Perspective
Satoshi Nakamoto, an unknown person has given the initial idea of blockchain in 2008. Technical ideas were explained in that research paper and he defined an electronic coin - Bitcoin: a person -to-person version transmission network, shortly after Nakamoto’s whitepaper was released. In 2009, executed the ideas that has discussed in the research paper. As an innovation supporting Bitcoin, for all the transactions it worked as public ledger. When we use token more than once in digital cash payments, which leads to double spending problem.by using blockchain technology this problem can be avoided and it doesn’t require intermediaries. Initially everyone believes that blockchain and Bitcoin are same. In 2014, the blockchain started to invest more than cryptocurrency then people start realize that they are not same.
Basically, Ethereum is an open source second era of blockchain, proposed by Vitalik Buterin’s and is launched in 2015. Ethereum Classic, Neo etc. are comes under this generation. In 2012, Ripple was introduced. It is a private enterprise blockchain. It is a real time gross settlement network. It manages credit transactions and cash payments over time. It can improve the transparency and speed of worldwide payments. In 2014, corda distributed ledger platform emerged, which is considered as R3 private blockchain platform, used for banking services. In this network, the people who involved in the transaction process can only able to see the transaction details. This makes the transaction more secure.
Since 2015, largest banks like Goldman Sachs, J.P. Morgan, UBS etc. are created their own blockchain laboratories to work with blockchain platforms. Based on the blockchain technology Goldman Sachs register a patent for transaction settlement. Later, extensive research on blockchain technology have carried out by Nasdaq financial exchange market and the New York stock trade. First security transactions done by using the blockchain transaction platform Linq, was finished on December 30, 2015 and it was declared by Nasdaq. Initially it supports Bitcoin as a distributed database and currently it is handling decentralized applications. From this you can observe its development.
Current Perspective
For decentralized applications blockchain controlled working network, EOS makes a base for those applications and it a recent invention of blockchain as of 2018. It makes the process very efficient without collecting any charges (fees). Current developments such as digital wallet Alipay is adding Bitcoin option for their corporate customers to make for international financial transactions. Visa has collaborated with blockchain to make B2B connect, an enterprise blockchain infrastructure to make global financial transactions easier for their clients.
Today lot of experiments are occurring in financial industry to increase the use of blockchain. Financial institutions which are already established are more likely to use blockchain for intra-organizational projects, intend to reduce organizational complexity and reduce costs. United states of America and western European countries are the most dominated countries which uses blockchain especially in financial services industry, where the technology is expected to have greater impact because of its ability to minimize transaction fees.
Lot of intermediaries and fraud transactions were involved in Supply-chain finance with a huge transaction charge. From McKinsey calculations blockchain technology is expected to assist banks by minimizing operational costs. First blockchain-based trade transaction has finished by Barclays Bank and Israel-based start-up. The transaction assured the send of cheese and butter products from Irish company which values USD 100,000.
The intermediaries of banks will be expanding widely every small detail is spread out and public, it is not possible to hack the information and also not able to corrupt it. Few years back, ideas were appeared impossible are currently in production. There is a massive development in the technology, if just in 5 years there. We can surely anticipate huge changes in financial sector in the coming years.
Conclusion
Blockchain technology has been decreasing the intermediaries by bringing massive benefits to the users. Bitcoin (2009), Ethereum (2015) and EOS (2018) are the major revolutions that occurred in blockchain technology. It has a potential to disrupt financial industries by minimizing transactions charges. It creates a competition between the nations to have the best blockchain technology. It has a huge impact on the financial sector because of its robustness, transferring the funds from person to person with less amount of time. The technology is disruptive in a way, when we consider intermediaries. With loads of examinations, blockchain is a worth considering the efficiency and security, transparency in the financial sector. Finally, it will change the financial services and the way it operates and there would be a many more innovations in the future.
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