Blockchain will replace banks? It’s not likely, however, the technology has numerous benefits. It’s an open, decentralized ledger that can be reversed and compromised. It has the potential to improve the efficiency of payments, cheaper, and safer. But how can it do that without causing disruption to the current financial system? Let’s discuss. Here are some benefits:
Blockchain technology is a type of digital ledger
The digital ledger (or blockchain) is a revolutionary new way to store data and transfer money. Blockchain technology has the potential to create an era of change in the banking industry as well as new business models. Blockchain technology provides an entirely secure method to transfer money without third-party verification. Blockchain can also reduce the time required to process bank transfers by many years. In fact 90 percent of European Payments Council members believe that blockchain technology will fundamentally alter the industry by 2025.
It is possible to hack it
Hackers could exploit a security vulnerability in the blockchain system to steal more than $2 billion worth of cryptocurrency since 2017. One method of attack is the 51% rule attack. The hacker is able to control most of the nodes in the network and alters transactions to benefit their interests. However, humans aren’t immune to hacker attacks. A recent attack on Twitter resulted in people being tricked into giving over hundreds of thousands of dollars worth of Bitcoin. There are, however, ways to guard yourself.
It is a great option for faster, more convenient payments.
Nowadays, consumers rely on third parties to make payments, sign documents, and even conduct marriages. Blockchain could eliminate intermediaries and the associated costs. Blockchain would allow businesses to accept payments using QR codes that are linked to their blockchain wallets. This will make transactions more efficient and more convenient for both the merchant and the consumer. Technology could also decrease the volume of transactions and increase the revenue generated by transactions.
It can also be utilized by central banks as an additional form of currency
Although the Reserve Bank of Australia has been open to digital currency, it is yet to establish an compelling public policy argument for its use. It already has an efficient and fast electronic payment system that is completely free. Technology and consumer preferences will change in the coming years, so central banks could need to consider digital currencies as an alternative currency. The Australian government is currently examining the possibility of a blockchain-based CBDC in the wholesale financial market.