Everyone around the world is talking about Blockchain. And it’s already making global headlines…
“Blockchain Makes Rapid Strides in Banking Applications” – International Banker
“More Banks Are Trying Out Blockchain For Fund Transfers” – Fortune
“Banks Adopting Blockchain ‘Dramatically Faster’ than Expected” – Reuters
“Financial Firms to Use Blockchain Technology in Trade Processes” – The Globe and Mail
Well, it seems important doesn’t it?! Now the big question is – What exactly is ‘Blockchain’?
The Blockchain concept decoded
Blockchain is a technology designed for record-keeping. The most popular application of the Blockchain technology has been in the distribution and tracking of the first-ever digital currency – Bitcoin. It is basically a shared electronic ledger and all participants within the network can see all the transactions recorded in it.
Launched in 2009, this technology allowed participants to transact directly, and maintained a permanent record of all Bitcoin transactions ever made. Transactions were executed in close to real-time, and the digital verification of transactions eliminated the need for third-party regulation. It involves complex algorithms and verification from a peer-to-peer network of computers.
And here’s how it gets its name – A chain of blocks is created, wherein a block consists of a definite number of transactions carried out within a fixed period of time. Every block is linked to the previous block, and thus a chain of records is formed.
Is Blockchain transforming traditional banking?
After it’s successful application in managing digital currency, Blockchain is now on its way to becoming mainstream. And the same core concept and technology is being heralded as the ‘next big thing’ in banking and finance.
According to a 2016 study by IBM, it is estimated that 15 percent of big banks and 14 percent of financial institutions in the world will adopt Blockchain technology by 2017. And over one-third of the 200 global banks and financial institutions surveyed, plan to initiate the use of Blockchain in the next four years.
The use of Blockchain in banking and finance will primarily affect the way payments, cross-border remittances and trading activities are conducted. Here are just some of the great ways Blockchain will revolutionize transaction processing:
- Significantly reduce transaction processing time
- Slash transaction processing costs for providers, and transaction fees for consumers
- Eliminate the need for documentation and manual reconciliation of transactions
- Reduce the need for centralized regulation
- Eliminates the risk of fraud, errors and duplication
Blockchain has officially hit UAE shores!
Blockchain technology has been a hot topic in the UAE as well, with the UAE Government recently unveiling plans to move all government transactions to the Blockchain network by 2020. This vision is aimed at making the UAE a serious global fin-tech player.
And banks have already started testing this disruptive technology in the UAE, with Emirates NBD being the first one to launch a Blockchain network as part of a pilot project, this October.
The Abu Dhabi Securities Exchange also announced the launch of a Blockchain e-voting service in October, which will allow shareholders to vote in Annual General Meetings and also access the voting records, statements and more through the shared Blockchain database.