The blockchain mechanism can be put to several kinds of uses, especially in the financial sector. Financial services and blockchain go parallel because the blockchain mechanism is known to be a digital and distributed ledger facilitating transactions. Every party included within a transaction can check the previous entries and record the latest ones without interrupting the ledger.
It thus allows the financial sectors to use a trusted network and eliminates the need for a central authority. So, this article will explain everything you need to know about blockchain implementation in financial services.
Ways to implement blockchain technology in the finance industry:
Several financial sectors want an upgrade for their processes so that they can withstand new security threats and new data volumes. Because no central version of the information is offered by blockchain, comparatively, it is more recoverable and impregnable than other technical solutions.
Apart from the benefits of blockchain in financial services as offered by banks, this technology is beneficial to non-bank and fintech players as well. New entrants of the legacy problems are launched by blockchain finance tech to help them make cheaper platforms radically for facilitating innovation. To keep up with the new entrants, the traditional financial sectors need to invest in the blockchain mechanism and implement the trusted ledger into the financial services.
So, the steps to implement blockchain are as follows:
Choose your platform:
To begin with, implementing blockchain on the network, you will have to install Geth or Go-ethereum onto the workstation. You will not get connected to Homestead. It is the major network of the entire blockchain platform. Moreover, blockchain-based fintech solutions are emerging rapidly. Currently, Geth is available for iOS, Linux, macOS, Windows, and Android.
Initialize blockchain:
You need to make your 1st block manually for initializing the blockchain finance. Make sure that this block has every characteristic that the chain possesses. The chain will be shared across all the nodes in the network. For defining the block, you need to make a file formulated in JSON format. After the file is filled, a folder will be made by Geth that will contain the blockchain and will initialize it.
You need to understand that, for the node-to-node program’s propagation on Ethereum, you must have crypto to get sufficient computing power for the network’s actions. You can opt for services related to blockchain development for fintech to get the correct guidance and initialize blockchain easily.
Select the correct consensus protocol:
You need to select the correct consensus protocol because it makes hacking very difficult and also gives you protection against spam attempts for overloading your network. PoW’s (Proof of Work) famous consensus, Hashcash, makes spam and hacking attempts impossible to execute. Put to use blockchain based fintech solutions when it comes to choosing the appropriate consensus protocol.
Execute your 1st Smart Contract:
Smart contracts have the potential to self-execute from a pre-established threshold. It can be an amount, a date, or any other duly authenticated event. The blockchain mechanism’s main focus is on catalyzing the ability to run a smart contract. And without the capability of doing so, blockchain technology may not be worth your time.
As running smart contracts is something more than the knowledge of simple JavaScript, it may need you to take help from an experienced blockchain fintech app development company.
Debug and scale:
Blockchain technology in finance demands top-notch scaling and debugging. You will need some serious computer skills, and you are recommended to take help from many of the blockchain companies that are available out there so that you can do this step efficiently.
Without scaling and debugging the blockchain network, things will get prone to bugs having the potential to steal all of your money or the risks of being unable to offer the customers the technology they need.
The benefits of blockchain in the financial sector:
Here are a few advantages of using blockchain in the finance industry.
- Cross-border payments: The value transferring processes can be fastened and simplified with implementing blockchain. This makes cross-border payment easier and reduces costs significantly.
- Share trading: The financial experts can make use of this technology for allowing better trade accuracy and lesser settlement processes.
- Smart contracts: All the obligations are enforced by smart contracts without including the expenses associated with an intermediary.
- Online identity management: Blockchain can allow users to select ways to identify themselves. The users can reuse the identification for other services. It makes it easy to make an online identity.
- Loyalty and rewards: Blockchain will facilitate more traceability and transparency of the transactions. It helps insurers and banks to make better loyalty programs and rewards.
Conclusion:
Blockchain in the financial sector provides tons of benefits that some of the well-known technologies are not close to offering. However, several businesses consider blockchain to be a semi-new technology, and they are not ready yet to use it. But it is better to invest in blockchain because you may want to avoid being left behind by the other businesses using this technology in the financial sector.
