How Blockchain Technology is Affecting Banking

source: http://bitemycoin.com

The Finance industry has changed more in recent years than it has in the past couple hundreds of years. From bartering to physical currency, our financial transactions remained pretty stagnant until the rise of digital technology and the digital transactions that accompanied it. Now there’s a new player in the game ushering a new era: blockchain technology and its implications, namely Bitcoin.

Blockchain

A quick introduction to blockchain technology as it’s used in virtual currency (it has many other uses outside of this), think of it as a type of ledger or decentralized database that keeps track of digital transactions. Rewinding a bit, historically, transactions involved third-party intermediaries like banks and governments. When it comes to digital transactions, the need for an intermediary is especially strong because digital assets are essentially digital files that can be reproduced. That was, until blockchain came into the mix.

Because blockchain technology allows digital information to be distributed instead of copied, transactions can be monitored in a way that promotes transparency and accessibility. In step-by-step format, here’s how the process works:

1. A transaction is requested
2. The transaction is broadcasted to a P2P network
3. The network validates the transaction and the user’s status
4. Once the transaction is verified, it’s combined with others to create a new ‘block’ of data
5. The new block is added to the existing blockchain, a process that’s permanent and unalterable
6. The transaction is complete

Bitcoin: Rise and Popularity

From blockchain technology we arrive at Bitcoin. And when talking about Bitcoin, we have to touch on cryptocurrency. In essence, it’s virtual currency that’s only available in networks, has no physical form or intrinsic value, and its supply is not controlled by a central bank.
Bitcoin’s rise can be attributed to a couple of things, such as an increasing younger generation and a wide range of benefits it offers over traditional banking. When it comes to younger generations, virtual currency like Bitcoin suits their upbringing that was marked with online transactions, familiarity with computer science, crowdsourcing and the like.

Bitcoin: Benefits

● Faster Transactions: As we touched on earlier, traditional banking involves third-parties. The problem with this is that each party that the finances passess through adds more and more time until it arrives at its final destination. Blockchain and Bitcoin goes around this by decentralizing everything, effectively reducing what would take a couple of days to a couple of seconds.
● Reduced Cost: With faster transactions comes reduced costs. Just as every third-party adds time to the process, they also add fees. After all, no one really works for free (especially in banking), and this is especially true for international transactions that would otherwise need to pass through central banks while piling on their exorbitant fees.
● Accessibility: As long as users have Internet access, they can access transaction details anytime, anywhere. In other words, authorized users can access transactions in the blockchain’s shared ledger. This means no longer having to make a transaction before 7PM on a weekday. Instead, your window opens up to 24 hours a day, 7 days a week.
● Transparency: As accessibility increases, so does transparency. Because transactions are recorded and locked in blockchains, the entire exchange is recorded and, as we just covered, accessible by authorized users.

Final Thoughts and TL;DR

Bitcoin has seen its ups and downs. Downs that included headlines like, “Is Bitcoin Dead?” and “Why You Should Not Invest in Bitcoin or Any Other Cryptocurrency,” and ups with headlines like, “Bitcoin Just Became More Valuable Than Gold. Why Does The Price Keep Rising?” Whatever the future holds, it’s clear that we’re in the middle of a financial transaction revolution marked by decentralization and prices dictated by the market.
As for the tl;dr version, here it is:
● The Finance industry is changing rapidly with the advent of virtual currency like Bitcoin
● This change is spurred on by blockchain technology and the benefits it offers over traditional banking
● Such benefits include faster transactions, reduced costs, and greater accessibility and transparency
● Bitcoin has been hailed as ‘digital gold’

Good luck mining and/or investing!