The record-keeping technology

The record-keeping technology

Introduction

The record-keeping technology behind the Bitcoin network is known as ‘blockchain.’ The accepted definition of blockchain is a distributed and decentralized ledger. A Blockchain is an easily understandable concept. It is important to note that the blockchain is just a block of chains. This is a block made of digital information and stored in a public database. The blocks are made up of three pieces of digital information. The first block stores information regarding the essential transaction. For example, the date and dollar amount of purchase. This can be purchase from Amazon or any store. Secondly, information about the participants of the transaction. For example, when one purchases a bag from Dior, the knowledge of the purchaser and what is purchased will be stored in the blocks. It is essential to note that this information does not include private information. The blocks only take into consideration the username, for example, ‘white horse.’ Lastly, distinguishing information. Blocks store information that differentiates it from other neighborhoods. It allows the users to tell the differences involved in these blocks. The unique code used as a distinguishing factor is known as a ‘hash.’ It is important to note that blocks store different amounts of information for various organizations. For example, one block of Bitcoin can store data up to 1GB. Some organizations, on the other hand, do not have this amount of storage. It is essential to note that many industries are currently using blockchain. This is beneficial for their companies and their departments and is aimed at improving the efficiency of the organization. These industries include; law enforcement industries and banking industries. This paper will focus on the blockchain and how it influences the banking industry.

Body

Blockchain began as cryptocurrencies for companies and organizations such as Bitcoin. However, this has grown to be an essential ledger aimed at recording and verifying high volumes of data, including transactions. This is spreading across so many industries, including the banking industry. This technology has gone beyond banking and cryptocurrency. According to statistics in business, businesses are expected to spend more than 2.9 billion dollars on this tech. This is a 90% increase from 2018. Industries are starting to recognize the advantages of using blockchain. The success of Bitcoin has increased its popularity significantly. Entrepreneurs have started integrating this into their businesses. The use of this technology is endless. Furthermore, this technology operates without supervision, which makes it more applicable. It is essential to note that this technology is resistant to fraud. Research into blockchains has revealed the endless benefits that this technology could bring to other businesses, including secure money transfers, efficient monitoring of supply chains, and managing land records. Hence, blockchains are practical and usable in almost every industry worldwide.

When it comes to banking institutions, the blockchain used distributed databases and cryptography. This method is secure and safe, as this contains interlinked records. All these records are linked with the same information if they belong to the same block. Blockchains act as open ledger recording transactions that take place between two people. These transactions are usually permanent and irreversible. This is useful for banking and financial institutions since it helps them manage their finances and operations ably and efficiently. Bank managers have recognized the importance of blockchains. They worry that without this technology, then they become rendered obsolete. Blockchain is meant to improve these institutions, and every bank manager, and leader of financial institutions should take advantage of this.

According to researchers, the blockchain will popularize financial institutions and banks just as the internet did to the media. This is, however, scary for these institutions. It is essential to note that this is a new venture, and as such, there are risks associated with it. When the internet came to existence, and it was predicted that people would soon be reading their news online, the mainstream media scoffed at this. It is thus understandable when this fear develops. However, these financial institution managers should have in mind that this is a successful project. Bitcoin is an example. Additionally, the blockchain offers these institutions with solutions to most of the problems that face them. For one, this tech is safe, transparent, and secure. This tech is also decentralized, which is a massive benefit for banks. This tech is also associated with low operational costs, which are aided by decentralization.

To understand blockchains better, it is essential to look at the advantages and benefits it has to offer for these financial institutions. For one, it enables the reduction of costs. This tech is estimated to save institutions and organizations 15-20$. This is not the inclusion of other sectors. This is done in different ways. For example, the use of smart contracts. This eliminates intermediaries and counterparties in the chain and hence reduces the costs needed to maintain and execute these contracts. Secondly, blockchains enable faster transactions. Using the blockchain technology, only ledger entries are essential in moving money. Banks can, therefore, reduce the time taken to complete these transactions. For example, the verification of customers can take hours instead of 2-3 business days. It is essential to understand that this improves their efficiency through customer satisfaction.

As an IT manager, I would integrate methods to help my organization embrace blockchains. For one, I would ensure that the information and technology department has the needed and essential training to handle this new tech. This can be done by hiring an employee with this knowledge and skill. In turn, the employee will impart knowledge in the other and teach them how to handle this new tech. The second option is to introduce a training program that works. Training programs are usually long and expensive. Training programs would be fitting for banking organizations as they are large and employ a vast number of employees. The training program is to be short and useful, not to interrupt the normal functioning of the business. The company will use IT, people with enough knowledge and skills to help the organization. Secondly, these people have to be experienced regarding blockchains. Thus, their efficiency is increased.  However, explaining to the stakeholder the importance of this new tech and how it can contribute to the success of the organization can go a long way to help in securing the funds. Since this is a financial institution, I would recommend ripple as a security strategy. This is aimed at increasing the security of cross-border financial resources. This security measure allows for payments and exchanges of cryptocurrencies.

Conclusion

In conclusion, banks and financial institutions should embrace blockchains. This is a new technology aimed at improving and increasing its efficiency. Furthermore, it offers a faster and secure way to do business. As such, banks stand to benefit significantly from this new technology. These institutions should also ensure that they have the knowledge and skills to manage this new technology. This can be done by implementing new training programs and bench-marking with other organizations. Blockchains are currently a wave impacting almost every industry. Financial institutions should not be left behind.

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