Informative Details About The Future of Blockchain Technology

Informative Details About The Future of Blockchain Technology

Bitcoin is an alternative currency that has become increasingly popular in the recent past. There have been questions on whether the technology behind

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Bitcoin is an alternative currency that has become increasingly popular in the recent past. There have been questions on whether the technology behind bitcoin can be used to reduce the risks of the financial disasters which usually affect the world. The answer to this question is yes since the new technologies including the idea that underlies bitcoin known as blockchain have proved that they can help in reducing the global financial risks. The crash happened eight years ago and since then the regulators have strengthened the global financial system. However, the structure is not yet as strong and robust as many people would wish.

Some of the aspects of the structure that are still weak include the fact that the important functions such as payment and trading are still concentrated in the large banks which are undercapitalized. Such functions are also concentrated on other central hubs even though the regulators have been working hard against this because when these institutions record losses they also affect the general economy. Furthermore, the authorities do not have a real time understanding of what is going on in the financial market or where risk is high. However, the blockchain technology has the ability to deal with these two issues.

It is also a known fact that trust is the most important aspect while dealing with finances. The various institutions have made it possible to transact with strangers and the ability to know who owns what resources. But these centralized intermediaries are also responsible of creating vulnerability. Blockchain works by creating trust in a modern manner. The technology creates a distributed ledger which ensures that all the transactions of the participants are documented. Consequently, it becomes simple to verify the history of the transactions which is recorded in a computers network where the computers are spread globally. This means that the records are available in different parts of the world therefore making it almost impossible to tamper with the records. The technology can allow all transactions in a public distributed ledger. The authorities would be able to even let the large institutions such as banks run in trouble. Through this the institutions would not be doing risky things which can make them vulnerable to loses.

Ways to make it happen

The exchanges and big banks are already engaged in different projects that are aimed at building private blockchain systems. These systems include the ones that are aimed at processing trades in credit derivatives, Australian equities and stakes in private companies. This particular innovation will not be transformative on its own, but it will be known as blockchain on trading wheels. Startups which are independent are working towards coming up with public blockchain. Such systems have more potential but the current financial regulations put these startups at disadvantage. For instance, any company moving money from one country to the other needs to be registered on all the countries it is operating in. in the U.S the regulations are even tougher because such a company needs to be registered on all the states it is operating in.

The U.K. Financial Conduct Authority has come up with a modern solution in a form of regulatory sandbox. This solution works by allowing the companies to test their new concepts without necessarily fulfilling all the compliance regulations. This particular effort needs to be accepted globally so that the companies can test their concepts. The blockchain technology can be very helpful because it can significantly reduce the financial crisis. All what is needs are the regulators to give it a chance by letting it get explored to its fullest.

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