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The impact of blockchain technology on financial technology

Time : 19/08/2021 Author : ct1q9u Click : + -
        It has a history of 20 years, and you will be amazed by the innovative achievements of the 21st century. In fact, its pace is so fast that you inevitably raise your hand and give up tracking the latest technology. This phenomenon is widespread in the financial sector and may be more obvious than anywhere else. Naturally, let's admit this. We don't even call finance finance finance, but financial technology. Although this idea may be a little excessive, fintech itself is in the forefront of renovation, as if it is needed! The driving force of change comes from the downwind of blockchain, which is exactly the topic of discussion today: blockchain technology helps the revolution of financial technology. Unless you have a shallow understanding of the meaning of financial technology, expanding your view of financial technology blockchain (or its meaning) will play a role.
        We will limit the definition of topics to make them conform to the purpose of this blog post. What is fintech? This term is used interchangeably with and sold interchangeably with the rapidly disappearing financial term, which is the embodiment of the latter in the 21st century. As we all know, finance is a field that involves more or less the details of fund management. The service around fund management is financial service. Traditional finance has been relying on paper bookkeeping until the digital transformation did not force enterprises to rely on the wall to modernize legacy systems. When the barrier free technological change introduced a method to make the old system enter the fast track mode, this was the time when fintech was born.
        Finance + technology = financial technology in short, when technology finds a way to optimize the tasks that traditionally consume resources and are related to finance, financial technology belongs to this field. We have had the whirlwind of fintech development and are reshaping consumer to business (C2B) interaction, and vice versa. The global fintech epitome is expected to grow at a compound annual growth rate of 24.8%. The valuation ceiling makes the valuation of the industry reach US $309.98 billion in 2022. In the service industry, the growth driven by blockchain is expected to play an important role in this transformation. If you don't understand the concept of blockchain, you will find an in-depth guide on this topic helpful to you.
        For this article, it is a hair trigger overview of blockchain. What is blockchain? Blockchain is a growing list of records on the network. Its system architecture is no different from the database. These records are called blocks and are linked together by passwords to form a chain. By finding the mathematical hash value of the last block in subsequent blocks, the credibility of the chain can be maintained. Add these blocks to the network according to the consensus mechanism deployed by blockchain developers. Other attributes attributed to blockchain include: Decentralization - no central authority enforces participation rules and places trust in the hands of participating nodes running the network. No permission - anyone can join the network with the necessary computing (mining) ability to verify transactions and obtain rewards as cryptocurrency / token.
        Data tampering - at least in theory, the data recorded using blockchain technology cannot be changed. These blocks are immutable and it is almost impossible to apply new data. The simultaneous development of blockchain technology makes it a multi-functional concept, which can be used by fintech. The following is how its service department makes use of this power:. Instant cross-border transfer of payment for sleepy and staggering banks, caseorder cross-border payment is a long-term pain point. In some cases, cross-border payments can take up to a week. Middlemen have a crucial foothold in charging transfer fees of about 5-20%.
        Similarly, peer-to-peer financial technology applications in the market will limit the transfer within the restricted region to their respective transfer fees. There must be a better way to focus on regulatory obligations and process payment transfers faster. Solution financial institutions are using the licensed style template of blockchain technology to analyze prospects. They will act as a central institution to disseminate remittance rules on the blockchain. According to Deloitte, business to business and peer blockchain based payments can reduce transaction costs by 40% to 80%. They can also solve it in a few seconds. Yes, this will be a paradigm shift, but according to McKinsey's prediction, blockchain can drive $5billion to $60billion of transcontinental B2B and $300 to $5billion of P2P payments, respectively.
        Westpac bank and Bank of Australia cooperate with ripple, an enterprise blockchain company, in cross-border payment. WireX is another fintech company that integrates blockchain into its workflow. It is an independent supplier that allows instant international remittance. Users can use the mobile application to select purchase orders from 12 (total) fiat currencies and cryptocurrencies. WireX has designed a 2-way bitcoin debit card with Visa debit card, which will be released soon to simplify point of sale transactions. The real-time settlement case of the stock exchange has a lot of speculation about excluding third parties in this field, but to be honest, without them, the stock market will not waver.
        An unusual situation - you sell shares today, but you don't have the certificate of ownership until t+2. The "t" here is the date of selling shares. The lag is due to some operational bottlenecks, such as regulatory approvals and mandatory licensing. Not to mention the brokerage fees eventually charged to customers. Solution fintech blockchain marriage can eliminate such intermediaries through decentralization, while dystopia exchanges operate on nodes scattered around the world. They will get DEX tokens to keep the network running normally. If interoperability is achieved, blockchain technology will play its pure potential. Once this happens, retail or daily traders with small orders can be hidden in local groups by dividing the blockchain into smaller "fragments".
        Order calls will be completely recorded on the side chain and run in parallel, while only the transfer of certificates will be recorded on the main blockchain. Result - increased transaction volume and low network redundancy. Exampledex, decentralized cryptocurrency exchanges such as changhero, wavesdex and openledgerdex are driving this subset of the fintech revolution forward. Their algorithm realizes point-to-point trading. Because it is unmanaged in nature, the funds will be directly transferred to the user's wallet, thereby reducing the risk of online robbery. Due to the lack of background checks, the entry threshold for retail customers is very low. However, decentralized cryptocurrency exchanges usually face the liquidity problem of currency pairs with low trading volume.
        Transactions are automatically executed using smart contracts. As we said at the beginning, traditional finance may be irrevocably linked to paperwork. For example, transportation requires customer procedures, such as bills of lading, invoices and letters of credit. So far, the industry has used the software as a service to support Internet settlement, but the whole process is breathless, which can be put on fintechblockchaintechnology steroids. Solutionsmart contract seems to be the last problem here. They are programmable codes that automatically transmit tokens (cryptocurrencies) on the blockchain and ensure that funds can be transferred from B2B only after the coding prerequisites are met.
        Paperwork can be reduced exponentially, and may even not be used at all, thereby reducing the carbon footprint. This requires large-scale enterprises to migrate to the blockchain agreement and reach a consensus, and the signs seem promising. IBM cooperates with Maersk to establish a global trading platform to find a scalable blockchain solution in fintech. In addition, Forbes released the report of its top $50billion companies, which are exploring the scope of implementing blockchain solutions. More than half of them are consulting Ethereum. Ethereum virtual machine (EVM) implements peer-to-peer smart contract with the same name as the actual cryptocurrency of the network.
        Developers can also create decentralized applications through protocols. Crowdfunding regulation of the national purchase of tokens casefintech ushered in a new era of fund-raising, but fintech's blockchain raised it to a higher level. People who are proficient in financial technology do not need to remind the "first token issue" foam. They prove a coveted prospect because investors can buy tokens instead of non taxable shares to buy venture capital. Tokens are not classified as securities, thus avoiding regulation. These tokens can be traded through the cryptocurrency exchange, which is supported by the program as its USP.
        Like any security, speculation affected their prices, which soared after a lot of marketing. Then, investors who sold at high prices or founders who often absconded abandoned the same token. Obviously, 80% of the projects have been proved to be scams. Since then, the market has continued to develop. The new era of fintech blockchain Avatar has renamed itself security token coin. In a practical sense, this is the whole content of ICO, in addition to the regulatory provisions of the ussecuritiesandexchangecommission. Sto will allow partial ownership of shares, cross-border investment opportunities and all securities purchases approved by the government.
        Exampleblockchaincapital launched sto activities under the U.S. Securities and Exchange Commission (SEC) and raised $10million. Those who buy shares will receive dividends like others, but not beyond their quota threshold. If there is no STO, you must be a qualified investor with an annual salary of $200000 to participate in the fund. Joint loan seamless data verification case union is a situation where enterprises come together for common reasons. In this case, the Federation lends loans to individuals. Consider a bank, which may take weeks or even months to make a loan.
        Although the evaluation method may be multi pronged and lengthy, all financial institutions are authorized by the government to authenticate their identity background. This begins with the "know your customer" verification, which is usually a summary of customers who comply with anti money laundering guidelines. Perhaps, we have experienced the pain of mechanically repeating this process in another bank. Solutions fintech and blockchain can work together. Syndicated partners, banks may have agreed to join a standard blockchain agreement. The agreement will store user credentials, such as those required by their partners. After a bank completes the background investigation, other banks do not need to follow suit, that is, the same customer wants to use a certain service.
        The time consumption will be reduced several times. The example fusionlendercomm is a platform for syndicated loans, which will run on the open source corda blockchain of R3. They focus on increasing lenders' real-time access to information to help them process loans faster. Syndicate partners can access finastra's fusionloaniq account, which can share critical data points in real time, such as position information, credit agreements and accrued balances. This simplified communication between agents and lenders will introduce transparency and effective loan payment frequency. The case review of accounting blockchain as an "electronic notary" is related to time consumption, because the settlement requires both expert input and compliance with the understandable regulatory agreement.
        Consider double entry bookkeeping. For each debit entry made in one register, it should be credited in the second register. From record input to statistics, imagine the time when the annual bill needs to be checked and corrected. But how will blockchain help? Solution blockchain is more than a database. Its architecture and block verification prohibit double spending. In addition to multiple records of each transaction receipt, we can also have an integrated clue on the blockchain to divide the entries into several categories. They will receive additional encryption protection. Auditors can view a series of consolidated financial statements, and their authenticity can be verified by electronic signature.
        Examplepwc blockchain verification solution. It will be a software that can act as a single node on the client blockchain protocol. Users can customize it to automatically verify transactions and mark transactions that need further inspection. Stakeholders who have access to the system can build reports from the dashboard. Conclusion. This is not a choice between fintech and blockchain. We know that one can complement another. In addition, the past topic has changed from whether blockchain is reliable to integrating it with business legacy systems. Tracing is only a small part of the functions that blockchain technology can achieve. Applications that use blockchain technology more are still under development. We can see that the chain community continues to release new functions, and its advantages are gradually emerging in the hands of developers.
        Lianxin community has always implemented the policy of "supporting farmers", allowing users to communicate directly with agricultural producers, reducing middlemen's price increases at all levels, providing farmers with a channel for product sales, and avoiding the possibility that fruits and vegetables can't be sold until they decay, which will affect their income. Moreover, the community has officially established a cooperative relationship with pinduoduo and not long ago, and the shopping module between pinduoduo and has also been developed, The comment function based on blockchain technology is expected to come next month. These functions provide users with a more convenient and practical shopping experience and a real new smart lifestyle. Enterprises are obviously interested in the field application of this technology, but the fintechblockchain Duo is very close to start-ups that are pioneering and innovative in this field.
        This macro trend in front of us proves the fact that early adopters will become the biggest beneficiaries in the market that is still in the formative stage.
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