Finance and the Blockchain
The article “Finance and the Blockchain: A Prime” has explained a lot of concepts concerning blockchain and finance. Blockchain is described as a record-keeping mechanism that is being used by many organizations in the current generation (Cecchetti & Schoenholtz, 2018). Different aspects concerning the recording of transactions have changed over time. In the past, people used to record transactions in ledgers, which were made of clay. In the 21st century, people are using digital ledgers, and blockchain has to be of great use. Many organizations are using blockchain technology due to the many benefits that are associated with it. Blockchain is not expensive since there is no transaction cost. All an organization is required to do is set some money to cater to the infrastructure.
To understand how blockchain functions, the article has explained the concept of maintaining records using ledgers. First of all, one needs to understand the structure of the database that is used in storing the records. In most cases, the database can be centralized or decentralized. Some people will be accessing the database. For security purposes, there is a need to regulate the number of people accessing the database containing the records. So, this means that there are some access rights which should be followed.
Under the access rights, we have two types of access. The first one is known as the open and public access where anyone can access and participate in activities concerning the database. The second one is known as limited access, where only several people are authorized to access and participate in activities concerning the database. In most cases, organizations prefer the limited access type since it is more secure. In case of any leakage or issue concerning the records, then the organization will know the specific people to question. By so doing, it will be easy to identify the person responsible for the action.
Blockchain and finance have integrated into many ways. First of all, Blockchain is designed majorly for distributed systems that can be used in the finance sector. When an organization implements its use, then the technology automates some activities concerning finance. Blockchain technology is in a position to record transactions between two individuals. There is no need to have a third party, and this means that the individuals will avoid some unnecessary costs. During the transaction, blockchain maintains the agreement to avoid some issues. The technology provides automatic mechanisms that ensure that there are no unnecessary changes made on the transactions.
Some people may access the finance systems and make conflicting changes without the organization noticing. With the help of blockchain technology, an organization will be in a position to prevent these conflicting changes. The use of limited access will be helpful since only a few specified people will be able to interact with the ledgers. There are some scenarios where there is the use of an open system. In an open system, users can make changes. However, there are some specific rules which should be followed before making any changes to the ledgers.
Blockchain technology plays a significant role when it comes to the finance sector. Many cryptocurrencies have implemented the use of blockchain technology, a good example being Bitcoin. In the future, all cryptocurrencies will have adopted the technology considering the way its use has dramatically improved. With the help of blockchain technology, finance management will be more comfortable in the future. Apart from being applied in recording transactions, blockchain technology will also be useful in other sectors. In the future, it may be applied in recording property titles. It may also be helpful when it comes to supply chain management. Since its speed is not that high, I hope that in the future, the rate will increase to support more transactions per second.
References
Cecchetti, S., & Schoenholtz, K. (2018). Finance and the Blockchain: A Primer — Money, Banking, and Financial Markets. Retrieved 15 January 2020, from https://www.moneyandbanking.com/commentary/2018/5/13/finance-and-the-blockchain-a-primer