Blockchain Technology in Banking is a new reality that promises to alter forever the method we manage our info in the digital world. This technology allows data transfer and capital in a completely secure way, thanks to sophisticated coding and encryption. Aware of the change this disruption may have in the banking world, at Santander, we want to be pioneers when applying it to our services.
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What is Blockchain or Chain of Blocks?
Blockchain is a technology-based on a chain of decentralized and public operations blocks. This technology generates a shared database to which its participants have access, who can track each transaction they have made. It is like a giant, unchangeable, and share ledger that is written by a large number of computers simultaneously.
This technology’s programmable and open nature allows innovation in the financial sector and administrative processes to make them more efficient and transparent. In addition, the bureaucracy is reduce. The Blockchain is the technology that developed Bitcoin, the virtual and intangible cryptocurrency supported by the P2P protocol and network.
Technology for the Financial Sector
Talking about Blockchain is talking about Bitcoin. Its “cryptocurrency,” born in 2009, was a small revolution: a new digital currency that escape the Central Banks’ control offer almost unbreakable security and allow payments to be made directly between the parties, making intervening entities unnecessary. Financial. Its objective: secure, direct, and transparent exchange in any transaction.
Despite the slow and limited use of Bitcoin today, its underlying technology, Blockchain or DLT – Distributed Ledger Technology, is emerging as a disruptive force in the operations of financial markets and institutions.
Areas Where Blockchain Technology Can Bring More Value?
Within the usual banking operations of assets and liabilities, simultaneous transfers, both of titles and payments, reduce the complexity of transmitting funds. In addition, the automation of the steps to convert current contracts into intelligent contracts -smart contracts- and its ease when formalizing new agreements can save time and costs for banks and customers since The bank commissions generate from each movement will be reduce. All this takes into account that banks can benefit from a faster process when creating and knowing their clients through blockchain technology.
The insurance area is also able to obtain significant benefits from applying this technology: greater speed in the processes and execution of payments and a reduction in the documentation required. And the forms to be complete and less need for interaction between claimants and insurance companies are some of the main advantages to highlight.
Blockchain and Why Bank Executives Should know About it?
Recently the word “Bitcoin,” a digital currency, caught the attention of entrepreneurs, governments, and techies for its unique design. Although Bitcoin is controversial and has yet to prove whether it can go from the fringes to the mainstream, the technology behind Bitcoin does not suffer from much controversy. On the contrary, the great benefit of Bitcoin may be that it has brought the world to Blockchain, the new infrastructure that promises to revolutionize the financial system.
Financial Transaction to be Made Safely and Reliably
One of the main advantages of Blockchain is that it allows. Financial transactions between two participants to be carry out safely and reliably. Intermediaries no longer participate, but the users themselves have control of their information and the entire transaction. Said information is distribute in multiple nodes independent of each other. They register and validate it without having to know the other participants.
It is Transparent and, at the Same Time, Private
With this technology, transactions are more reliable for two reasons: transparent and private. And it is that the movements, although they cannot be modify, are integrate into the network. As a whole and are public. That is, they can be seen without problems by each party. At the same time, the data from the transactions carried out between the parties are private. The flow of information does not exist since the design is base on a block of chained codes.
Information is Never Lost
Because many nodes participate in its validation, the information is secure. Even if the network went down, the service would never lost and continue working. Why? Only one of the nodes needs to be active. It is achieve thanks to decentralized networks, making it more resistant to malicious attacks since. It does not have a central opinion of failure.
The Blockchain or ‘chain of blocks’ remains a technology that allows the creation of networks of devices. Without a central and localized server to connect them. It could can said that it works like an account book, where purchase, sale, or any other transaction is record.