Digital financial transactions are the new black, be it at a dollar or a thousand-dollar transaction, all can be easily processed through our phones. These transactions are possible not exclusively because of your phone but the technology behind it. Blockchain technology makes digital transactions safer and more exclusive.
Blockchain technology has gained unparalleled popularity in the past decade. Originally designed to manage bitcoin transactions, blockchain technology is more useful for many industries than just bitcoins. People often use both terms - Bitcoin and blockchain - interchangeably, but a blockchain is much more than just a tool for managing cryptocurrency.
The market worth of the blockchain technology industry was estimated at $4.9 billion in 2021, which is predicted to increase to $67 billion by 2026. - Medium
The industry application of the blockchain is many; it has the potential to change the future of various industries. With NFTs in motion, blockchain technology will ingrain the finance sector more than any other industry. Still, there’s always scope and downside to every new technology so let’s discuss them further in this industry analysis of blockchain technology.
It is a finance-oriented technology focused on storing transactional records. Such finance records are called a ‘block’ among the many public databases known as the ‘chain.’ The blockchain is connected through a DTL or distributed ledger technology. Everyone can access these records, so it is harder to forge them.
In layman’s language, blockchain is a shared database. Every member of the blockchain has access to the entire database. Every transaction in the blockchain is processed by the owner's authorisation/digital signature. This ensures that every transaction is authentic and can’t be tampered with.
The word ‘Blockchain’ was first used by Satoshi Nakamoto in the world’s largest Bitcoin forum, The Bitcoin Talk. He defined it as a ‘proof of work’ chain.
Hence, the digital ledger is highly secure. The blockchain is used in various industries and still has roots in the original bitcoin blockchain developed in 2008. The only common denominator among all blockchain types is that they are designed to decentralise trust. Also, in this Industry Analysis of Blockchain, we’ll mainly discuss two types of blockchains:
Also known as permissionless blockchain, they are completely transparent and decentralised. Anyone can add blocks and access ledger history.
Such blockchain can be accessed through a privatised network. Working within a private network allows thousands of transactions in seconds. An authorisation or a digital signature of the ledger owner is required to access the blockchain or make changes.
Modern block technology is spreading like wildfire, and cryptocurrencies have taken the finance sector to new heights. Several industries - Banking and financial services, Automotive, Healthcare and life sciences, and insurance - have adopted blockchain technology. Even the government sector is using this for various processes. But what makes this technology so impactful? Let’s find out in the next section.
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Thousands of financial transactions occur every day, with millions of dollars moving back and forth in the industry. Keeping up this vast data and simultaneously ensuring the authenticity and safety of every financial transaction can be challenging. But, with blockchain technology, all this is possible. Hence, it has impacted many industries. There are several benefits of a blockchain:
As of April 2022, over 18 per cent of people own cryptocurrencies in Australia, and Bitcoins are the leading cryptocurrency across the nation. - Statista
Asset management firms are among the fastest-growing, greatly benefiting from blockchain technology. A shared ledger system reduces vulnerability to fraud and errors. With a blockchain, the time for data processing can be reduced, ensuring accuracy.
Earlier, financial transactions from one bank to another took up to a week; it is instantly transferred with a shared ledger system. Blockchain can enhance payment efficiency, transparency, security, and trust by reducing the expenditure on financial services and users.
Services like KYC (Know Your Customer) help finance companies simplify their process. Real-time data can be provided to businesses through a blockchain, reducing duplication and increasing trust. It also automates user identification through a single digital ID or other details.
The insurance sector is empowered via enhanced claim settlement and automation of processes through smart contracts. Cross-industry data sharing, centralised user authentication and easy access to customer accounts have improved the claim payment procedure and made it fraud-free.
Blockchain technology is also anticipated to enhance the efficiency of almost all industries. The shared digital ledger system enables confidential record-keeping, and users can access it via multiple platforms than just banking. But, is there a future scope? Find out about it in the next section of this Industry Analysis of Blockchain.
Now that we've reached the post-pandemic era, society is transforming rapidly, and so are the financial values. Amid the traditional financial circle that hinges on fiat capital, funds can equate to money, possessions and generational economic guarantee. Still, cryptocurrency has taken the notion of assets/funds and prolonged it further.
Blockchain-powered cryptocurrencies can be considered traditional wealth. In a sense, this technology has opened the doors for privacy, security, and decentralised trust in transactions ensuring users' financial security. Such processes are being introduced in the government processes as well due to the security and centralised authority it ensures.
There are more than 63 million blockchain wallet users in the world as of December 2022. - Investopedia
When in the right hands, a Shared ledger can bring meaningful capital to the society and help overcome various challenges. Proper finance management can improve global economic crises, lack of health facilities, innovation, and much more. Smooth and secure transactions through a blockchain will surely enhance the power of various industries and help the domestic and international economies.
So this is for the industry analysis of blockchain technology. Hopefully, you gained more insight into the various concepts of the blockchain. A blockchain is nothing more than a shared ledger, but it can revolutionise the finance sector and enhance the economy when used effectively.
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