Blockchain Demystified

 

Blockchain is a ubiquitous buzzword in the finance world. It is often gushed about as being revolutionary, bigger than the internet, and one of the most important technologies for the future of the payment industry. But what exactly is blockchain? Merriam Webster, the dictionary that is, defines it this way: a digital database containing information, such as records of financial transactions, that can be simultaneously used and shared within a large decentralized, publicly accessible network. Although there are many potential applications for blockchain technology—in fields ranging from politics to real estate—let’s look at a few ways it will impact the financial industry.

Security

The unique feature about blockchain technology is that data isn’t stored in a centralized location or server. By putting data onto a public ledger that isn’t deleted, it removes the need for a third party to validate and verify transactions. Without a bank to hold the money, blockchain makes it hard for criminals to be successful. In order to commit fraud, someone would need to act simultaneously on shared ledgers in multiple locations. This makes blockchain almost impossible to corrupt. In addition, with blockchain all transactions are accessible by all users on the network. This transparency makes manipulation highly unlikely.

Speed

By using a network of computers (called nodes) to administer transactions instead of a third party, blockchain makes the transfer of money instantaneous. It eliminates the waiting period—sometimes several days—for payments to clear into a checking account or for money to be sent internationally. The Deloitte Center for Financial Services forecasts that by 2025 blockchain payment systems could equal the transactions processed by the ACH network.

Cost

Businesses are drawn to blockchain technology because it eliminates middlemen. A world without intermediaries has the potential to be less complicated and increase revenue. The lure for banks lies in the technology’s ability to streamline processes and increase efficiency, which lowers operation costs. A recent report by Accenture—culled from data provided by eight of the world’s largest investment banks—found that blockchain has the potential to save banks $8-12 billion annually and reduce their operating costs by an average of 30% per year.
Although banks, credit card companies and fintech startups are all working on blockchain payment solutions, the technology—according to most experts—is still in its early stages. And while there will be stumbling blocks ahead, as is the case with all emerging technologies, blockchain will significantly impact all of our lives. That’s a compelling reason to stay informed about its progress and its applications.

 

Attract top talent to your organization by partnering with a payments recruiting firm. IMPACT Payments Recruiting’s experienced recruitment consultants at IMPACT have been working with some of the most premier payments companies in the industry for more than a decade to connect them with top talent for high-level positions. Our recruiting team is comprised of former payments industry professionals, so we have an in-depth understanding of how to target and evaluate candidates for your hiring needs. Learn more about IMPACT – contact us today.

Connected. Fast. Reliable. IMPACT.