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Nov 4, 2015 3:30 EST

How Blockchain Is Changing Finance As We Know It

iCrowdNewswire - Nov 4, 2015

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Many people have become familiar with bitcoin as a currency and the technological processes behind it. Bitcoin transactions are verified using the same open-source blockchain technology behind torrents and Tor. While blockchain has been a necessary and important process for use with bitcoin, technologists are quickly realizing that blockchain can be applied across multiple sectors, including the financial services sector.

The challenge now is leveraging the open-source technology while maintaining regulatory requirements and investor protection — which exist in order to mandate a level of centralized regulatory protocols.

This doesn’t mean blockchain technology isn’t already evolving the financial sector. A decentralized verification system can work; it’s an extremely efficient method to track transference of title. And today’s market has layer upon layer of inefficiencies in its technologies tracking ownership.

Unregulated blockchain technology in financial services is not an option, but blockchain 2.0 could be as disruptive — and transformational — as the Internet.

Look for blockchain to have the following five effects on the financial world moving forward:

  1. Unbreakable Contracts

A solid method of verifying ownership creates integrity of ownership and allows for the transfer of artwork, precious metals, and more. This ensures an efficient transfer without the need for escrowed funds, credit and debit balances, and other banking products and services that have been implemented over the years.

No matter how large a business is, there are often times when the entire company’s future is resting on whether or not one client follows through with an order. On the consumer end, few people can afford to overpay for goods and services. Blockchain technology enables peace of mind for both parties, verifying transactions down to their genesis.

  1. The Removal of the Middleman

Perhaps the most underrated benefit of blockchain is its ability to cut out the middleman. It used to take up to seven business days to verify an ownership transfer, but it now takes 24 hours. Blockchain, within a regulated framework, validates the asset and provides simultaneous settlements without the need for any (often expensive) third-party services.

Imagine how much easier a real estate transaction could be without the need for so many realtors, bankers, and lawyers. Blockchain technology provides huge cost savings and simplifies the entire investment process, allowing people to eliminate any middlemen and go directly to the investment source. Anyone would be capable of downloading the blockchain to verify past history, serving like a Carfax for any large investment.

  1. The End of Patents (As You Know Them)

The proof-of-ownership standard set by blockchain can also serve as proof of existence, which could disrupt everything from credit scores to Social Security numbers. While all are possible, the United States is most likely to benefit from a new patent verification system. There’s already a working-use case at Proof of Existence, where documents are tracked instead of transactions.

  1. Unified Information

There are standard regulations in finance, but there’s no standardized security process. As a result, everyone’s working differently. With blockchain, investments can be converted to a bitcoin-like system, wherein all machines tracking the investments verify all trading. Implementing blockchain on this level could change the foundation of investment banking and disrupt Wall Street better than bitcoin ever could in its current form.

Older legacy systems have scattered information with inefficiencies and security problems that arise from such analog methods. When all investors have access to the same information at the same time, a level playing field is created in which the average Joe can compete with the old boys’ club of those “in the know.”

  1. Approval for Everyone

Much like a credit and background check is processed on anyone being hired or moving in to your property, it’s important for every financial transaction to be tracked so proper background research can be done. Blockchain technology in the world of securities ensures a healthier market because everyone has to be approved.

The counterparty risk is removed from the transaction system when everyone has a validated identifier, which blockchain provides. Everyone from NASDAQ to Overstock.com CEO Patrick Byrne is already researching, developing, and utilizing blockchain technology.

Although bitcoin still isn’t universally accepted as a currency, it’s beginning to gain traction. The technology behind it is what’s really valuable, though. Blockchain technology as a form of transaction verification is an important tool for accounting, investing, clearance, settlement, and other financial or legal tasks.

As blockchain technology evolves, be prepared for some major changes to traditional processes in the financial industry.

Vincent Molinari is the co-founder and CEO of GATE Global Impact, a leading electronic marketplace platform that’s helping the world’s leading organizations to standardize and accelerate impact investing. Vincent is also a managing partner at Constellation Fin Tech, and he consults with members of Congress and regulatory agencies on issues related to capital markets, early-stage companies, and secondary market liquidity.

Vincent Molinari
CEO / Founder
GATE GLOBAL IMPACT INC
www.gateimpact.com
917-886-7250
@vincemolinari
Skype: vince.molinari

Contact Information:

Vincent Molinari

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