How Blockchain reinforcements say it can protect the global economy

During the 2008 financial crisis, Lehman Brosos collapsed a few months after the publication of $ 4 billion, which was dropped due to hidden problems in mysterious accounting and complex financial tools. After nearly 15 years, the same date was repeated when the FTX collapsed wiped $ 12 billion in customer funds that many people have confused would be their lives.

Supporters have long said that Blockchain technology, which was born after the 2008 crisis, has made a potential solution to these financial disasters through radical transparency. The Blockchain professor’s booklet system can make deception such as those that exist FTX Almost impossible by creating a non -changed joint record for all transactions.

While great obstacles – from technical challenges to the type of institutional resistance Sam Bancan offered He criticized himself while committing his huge fraud – and has led the promise of technology transparency and security many companies ’giants today to invest hundreds of millions who merge him in their operations. Below, we take you after marketing and noise to explore the next real possibilities of this technology.

Blockchain case in financial security

Blockchain The book of the joint digital professor that everyone can see, but no one can change without everyone. It is very similar to how to use a group of friends in Google’s Slapping Records to track common expenses, with the exception of this professor’s notebook, durable and very difficult.

Technology advocates emphasize its potential to protect the global economy through transparency. When a bank or investment company performs a Blockchain transaction, they argue, it is like writing in permanent ink – there is no erasure or hide. They suggest that this vision can help prevent a kind of hidden financial problems that led to disasters such as the 2008 financial crisis.

For example, Blockchain supporters note that if Lehman Brothers are working on Blockchain in 2008, the organizers may have discovered their dangerous levels of risky investments months before their collapse. Likewise, they argue that this transparency could have revealed the misuse of FTX for customer boxes before the loss of billions.

Many people depend on banks to protect their lives and provide capital when needed through loans or credit. The brokerage firms have billions of dollars in investment accounts, and money flows between people, institutions and governments that use third parties. Thus, confidence is one of the most important factors that drives the need for Blockchain or something similar. Sitting along with confidence on the measure of financial importance is verification. Regardless of what or what is an entity or claims that, confidence must always be supported by verification.

Blockchain supporters argue that technology is concerned with these needs by providing any party interested in another opportunity to verify the confidence it places in people and institutions.

For Blockchain supporters, the idea is run as follows: The central bank will not rely on individual bank reports to review their operations and records. Since there will be a common record of transactions, organizers can monitor cash flows when making transactions, which means Central banks He will always have a realistic picture of Liquidity And risk distribution. They will also have an understanding of how every individual financial company behaves. This can remove large amounts of uncertainty from the health system health assessment process. Organizers will know in advance when there is instability in the markets, and they can control monetary policy accordingly before the development of the crisis.

Financial institutions and blocs

The adoption of Blockchain technology requires participation from a wide range of financial institutions, from international banks to local credit unions. However, many main financial players have already developed special groups for their internal operations instead of embracing the transparent public systems depicted by preachers.

Although these Blockchain applications are not necessarily designed for deception, critics are worried that they may not lack general accountability that can help prevent future financial scandals. Blockchain defenders argue that systems that only allow public or regulatory equipment can effectively deter misleading practices, because participants will know that their actions can monitor any interested party.

Blockchains of financial services

Main financial institutions such as Jpmorgan Chase & Co. (Jpm), Goldman Sachs (GS), Citigroup Inc. (CIt develops Blockchain networks that provide some promised benefits from Blockchain. These special systems or “permission” allow institutions more control while providing the following:

• Internal transparencyTransactions can be tracked between departments and subsidiaries immediately.
• Operating efficiencyMechanical settlement and settlement processes reduce time, international transfers, trade financing, and securities trading.
• Share selective dataBanks can share the specific transactions data with organizers or partners while maintaining the confidentiality of sensitive information.
• Automation of the smart contractUniform agreements and operations can be carried out automatically, which reduces manual treatment and potential errors.

For example, the Kinexys platform from JPMorgan uses Blockchain technology to process billions of daily transactions among institutional customers, and the HSBC subsidized subsidiary aims to simplify trade financing documents between banks and companies.

However, these special systems do not provide the general accountability that Blockchain advocates say they are necessary to prevent future financial crises. Critics argue that by maintaining a closed Blockchains, financial institutions maintain the same output that enabled previous financial scandals, with a more efficient technology.

Challenges and restrictions

Despite the Blockchain promise, many obstacles remain before a wide -ranging dependence:

• Technical expansion capacityThe current Blockchain systems cannot be processed by a small part of the transactions that deal with traditional financial networks daily.
• The organizational frameworkLack of clear regulations about Blockchain technology creates uncertainty for institutions that are considering accreditation.
• Implementation costsConverting current financial systems into Blockchain requires a significant investment in infrastructure and training.
• Energy consumption: Some Blockchain systems, especially those that use verification of work proof, require a large computing power and electricity.
• Industry resistanceFinancial institutions may resist changes that increase transparency and reduce their control of financial statements.

The road forward

While Blockchain technology provides possible solutions for many weaknesses in the financial system, its implementation is likely to be gradual. Some Blockchain industries may adopt more quickly for specific use cases, such as the following:

• Border payments and transfers
• Commercial financing documents
• Settlement of securities and clearance
• Funding the supply chain
• Check digital identity
• Organizational reports and compliance

The success of these applications can pave the way for a wider adoption across the financial sector, although the schedule and the extent of this shift are still inaccurate.

The bottom line

While Blockchain technology provides possible solutions to increase financial transparency and security, its adoption on a large scale faces great obstacles. Explore financial institutions Blockchain special systems To improve its internal processes.

As with any technology, the final impact of Blockchain will depend not only on their technical capabilities but on how institutions, organizers and markets implement.