Financial technology, also known as fintech, is a recently formulated technology that helps consumers to receive streamlined financial services. Fintech addresses almost all aspects of the finance sector.
Fintech has revolutionised the world of finance. From updating bank transactions to formulating decisions regarding investments and stocks, every financial work can be accomplished by using either a mobile phone or a computer.
A lot of fintech’s success is riding upon blockchain. It has given birth to cryptocurrency, one of the most popular financial technology. However, with growing concerns over crypto’s instability, faith in blockchain, too, is receding. This article will discuss in detail why fintech must not lose its faith in blockchain technology.
Blockchain technology and cryptocurrency
Blockchain is a kind of database that is distributed among various nodes of a computer system. A blockchain is quite different from a typical database. Here the data is usually stored in the form of blocks of varying sizes, while the database store data in the form of tables.
Once a block with a certain size has been filled up with enough information, it is closed. Subsequently, that block automatically gets linked with the previously filled blocks and eventually forms a chain. This cycle keeps on continuing hence the data chain gets extended.
Blockchain technology is mostly used in cryptocurrency to maintain a secure and hassle-free transaction over various computer networks. Cryptocurrency is an excellent example of fintech. It is a digital form of currency that is designed to be used across the internet without any assistance from third parties.
Cryptocurrency is not issued by any central bank hence no government can control it. The first cryptocurrency, Bitcoin, was launched in 2008 and is still in immense demand.
Reasons fintech should keep its faith in blockchain technology
Recently, blockchain's reputation has been adversely affected due to the great downfall of various cryptocurrencies. Besides cryptocurrencies, many NFTs are also facing a downfall. However, fintech must not lose faith in blockchain as this technology has a lot to offer in the field of finance and beyond.
Blockchains use technologies that do not allow any third party to intervene when there is an ongoing payment. Therefore, sectors that deal with fintech, like the banking sector or the investment sector opt for blockchain.
Bring down cost
Blockchain technology will also assist fintech companies in reducing their infrastructure cost. Hence, banks can stop availing services from intermediaries or other third parties. Blockchain can also help various banks reduce the cost of creating new contracts.
In a statistical prediction, it was stated that blockchain could reduce costs by $20 billion USD.
Rapid transaction of money
Blockchain technology can transfer money faster than traditional systems. It takes a few seconds to complete the entire transaction. Therefore, banks can execute rapid transactions.
Blockchain technology avoids any third party while executing a transaction. Therefore, the transaction time has reduced significantly, thus, increasing in number.
Fintech sectors deal with a large amount of capital. Hence, it requires a top-notch security level to safeguard all the capital. Blockchain technology can easily secure all transactions with its technology.
No one can easily decode transaction details or information because implementing blockchain protects them from third parties. Secured transactions take place using two keys, one is the public key, and the other is the private key. Private key shares information of the transaction between two specific parties.
Blockchain technology is essential for fintech because it carries all the responsibilities against fraud and misuse of assets. It reduces transaction errors that occur during the transfer of money. It also brings down cases of fabricated information.
Blockchain still has a very promising future even after all setbacks it has witnessed. It will benefit financial technology in the future and create more job opportunities. Therefore, if anyone is interested in commencing a career in fintech, then they can opt for an online fintech certtification course.
Imarticus Learning has brought the SP Jain Fintech certification course for those who are willing to make a career in fintech. This course will incorporate the required knowledge and skills, including API, cloud computing, machine learning, IoT, AI, taught by renowned faculty. The course is spanned over 3 months and opens gateways through partnerships with industry giants. Apart from access to an online library housing more than 900,000 books, students get the esteemed SP Jain alumni status. Enrol in this course to bag alluring job opportunities today!