COULD BLOCKCHAIN TECH REPLACE TRADITIONAL PAYMENT METHODS?
One thing is for sure, the value of and interest in bitcoin remains at an all-time high. Everyone is paying close attention to this space, from the man on the street to large banks, financial firms and corporations. And while bitcoin is the word on everyone’s mind and lips, it is the technology behind it, the blockchain, that could potentially be the most disruptive in the financial industry.
How will the blockchain revolution ultimately affect the financial services market?
The value of blockchain technology to the banking sector is profound for several reasons. Just take a look at these statistics:
- Potential for blockchain to reduce bank infrastructure - 30%
- Approximate annual savings for banks using blockchain technology – 30%
- Predicted worth of the blockchain market by 2024 – up to $20 billion
- Average investment in blockchain projects in 2017 - $1 million
- Percentage of major North American and European banks currently exploring blockchain - 90%
- Number of people who believe blockchain is the banking sector's biggest disruptor - 9 out of 10
According to an IBM report, the banking industry has been adopting the technology ‘dramatically faster than expected.’ The report, which surveyed 200 global banks found that 15% of banks are expected to implement blockchain in some way by the end of 2017.
The report further states the following:
- Banks are using blockchain technology in three areas, namely retail payments, consumer lending and reference data
- In four years, IBM expects 66% of banks to be using blockchain for commercial production
- The majority of banks are still in the testing phase, while globally, eight banks including HSBC and Bank of America are testing out blockchain in bond transactions
The future of blockchain in the financial market
Some may think the most obvious way to make use of blockchain in the financial sector is through cryptocurrencies like bitcoin. Since it was first created, this virtual currency has had many ups and downs, but a considerable boom in 2017 has forecasters predicting it should hit $500 000 by 2030.
Top ways blockchain technology could transform finance and banking
Fraud reduction - While a new technology, blockchain has the potential to reduce fraud in the financial world. According to shocking data, 45% of financial intermediaries like stock exchanges and money transfer services suffer economic crimes every year. Since blockchain is a distributed ledger, its advanced technology could reduce some of the fraudulent activity online against today’s financial institutions.
Know your customer (KYC) – According to a Thomson Reuters survey, the financial sector spends up to $500 million a year to adhere to know your customer and customer compliance regulations. By using blockchain, banks can receive independent verification of one client from one organisation, which can then be accessed by other organisations. This means that the KYC verification process wouldn’t have to start over again and any costs for compliance would be significantly reduced.
Smart contracts – Blockchain has the capability to store any kind of digital information, including computer code that could be used to create contracts or execute financial transactions. This would ultimately improve the efficiency of the entire process, prevent fraud, and cut costs.
Payments – Blockchain has the potential to transform the payment process. Not only would it enable higher security but also lower costs for banks to process payments between clients and the banks themselves. At the moment, there are various intermediaries in the payment process, but with blockchain, they will no longer be needed.
Trading platforms – The changes that blockchain could bring to traditional trading platforms is exciting as the risk of operational errors and fraud will be dramatically reduced. In addition, the American stock exchange Nasdaq and the Australian Securities Exchange have already been exploring blockchain solutions to improve efficiencies and reduce costs.
Blockchain technology in online gambling
Blockchain is now a major player in the igaming space as well, with operators like FortuneJack becoming one of the first to offer a fully inclusive bitcoin gaming experience. Because there are very strict rules and restrictions placed on the online gambling industry by various jurisdictions around the world, bitcoin allows players to get around these limitations. The online gaming industry is the perfect platform for bitcoin with many online casinos now accepting cryptocurrencies as a digital payment.
Blockchain technology in other industries
Blockchain technology is becoming a focus for companies in many industries. According to a report by Deloitte, the manufacturing, technology, media and telecommunications sectors are the industry’s most likely to have blockchain projects in the pipeline, while the healthcare and life sciences sectors have plans to institute blockchain projects before the end of the year.
Check out FortuneJack, the biggest bitcoin gambling site, and stand a chance for to win big with bitcoin with a wide variety of games on offer.