Blockchain: A threat to Banks and Data Privacy? 

 

 

Blockchain is one of the latest technologies that is a new trend in several years. Cryptocurrency is one of its famous applications. The technology meant digital transactions take place. The data that we considered here is secure and transparent. It is a distributed ledger where it is more than proof of work and incentives into full-fledged implementations.

 

How Blockchain affects Banks?

 

Today, for the banking sector, the biggest threat is technology. Traditional banks have noticed upcoming tremendous changes and innovations in technology. This includes famous tech companies like Google, Amazon, and Microsoft, and also other Fintech companies too. One of the technologies is Blockchain technology. To stay on top of this innovation, large financial institutions, from stock exchanges to investment banks to central banks, are all beginning to work on their blockchain-based solutions.

Banks who started working with Blockchain technology:

 

Stock exchange NASDAQ OMX Group Inc.  (NDAQ) considers one of the technology-focused. It  has said it is working with blockchains to “reduce the costs, time, and points of friction across the capital markets.” To develop blockchain-based solutions Spain-based Banco Santander (SAN) is working internally. By the end of the decade, it will reduce its costs by $20 billion a year. Barclays (BCS) is viewing blockchain technology as experimenting with it both internally and via partnerships with start-ups to use it as it relates to financial services. It considers being “transformative”.

Swiss investment bank UBS (UBS) to conduct proprietary research for the company to use has gone so far to create its standalone blockchain lab. Citigroup Inc. (C) reveals that it works on at least three different blockchain-based undertakings including its cryptocurrency known as CitiCoin.

Payments

The payment system is the basic use in Blockchain technology. The payments that take place in the technology may take a few minutes. But it will surely ensure that transaction is 100% confirmed. The transaction takes place over the internet. Furthermore, transactions are secure, bondless, and largely anonymous. Transactions costs are not that costly. They can cost only a few cents per transaction which makes it cheaper of sending money.

 

In the above, we can cost is minimal as compared to the send money around the world than wire companies like Western Union (WU) or via credit card processors such as Visa Inc. (V), Mastercard Inc. (MA), or Discover Financial Services (DFS). Instead of a fraction of the cost, a merchant not wanting to pay the initial and ongoing fees to accept credit cards could take electronic payment via a cryptocurrency.

Remittances

The difficult undertaking that considers is Remittances. In this paragraph, let us try to understand its meaning. In this process, money is stooled or interpreted. Legal and tax issues might consider during this process. The fees charged on this very costly and processing time is very slow. Blockchain technology can help to overcome this problem. In this way, many companies do have started to facilitate remittances.

Deposits and Account Balances

Holding deposits in checking and savings accounts, consumers generally utilize banks. The bank loans most of it out via fractional reserve banking, once you deposit money into a bank account. However, when you view your account balance is not held by the bank shown by most of the money.

A bank fails when too many customers attempt to withdraw their money all at the same time, and the money just is not there. In conclusion, it causes a bank run. Therefore, it is just an accounting entry bank account balance.  Representing accounting entries, the blockchain is ultimately a ledger. Therefore, bank accounts could come to represent blockchains making them more accessible, secure, and cheaper to maintain. Furthermore, the risk of bank runs could alleviate.

 

Data privacy

As a way, Blockchain acknowledges solving fair information practices, a set of principles relating to privacy concerns and practices for users. To control their data through public and private keys, blockchain transactions allow users, allowing them to own it. Third-party intermediaries do not allow obtaining data and misuse it. If personal data stores on the blockchain, owners of such data can control how and when a third party can access it. In blockchains, an audit trail that ensures ledgers automatically include transactions is accurate.

DAO Hack

It is not immune to malicious attacks, while blockchain technology anticipates solving privacy issues such as data tampering, breaching, and other threats. In 2016, for a particular project, the DAO  opened a funding window. During this period, the system hacks, from the Ether fund resulting in the loss of cryptocurrency then worth $US3.6 million.

Conclusion:

Though blockchain has become one of the latest technologies until now. Still, there can be many reasons for not accepting by some countries. Getting used to a particular one always takes time. And so, Blockchain is that technology.

 

 

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