Blockchain: The new innovation for financial services

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Blockchain has been one of the most awe-inspiring innovations since the Internet came into existence. Blockchain technology basically allows everyone to hold and make transactions as strangers but in a completely transparent manner. There is no mediator in between two people making the transaction, and the entire process becomes easier and cheaper. This concept can be applied to the entire digital world making any kind of exchange/transactions secure (and not just bitcoin). This article will take you through numerous such business models and companies that are beginning to sprout based on blockchain tech.

The blockchain network consists of nodes, i.e., distributed servers. All the nodes can accept and process the transaction. The nodes on the network share information about the candidate transaction. As much as the logic/tech part of it sounds confusing, the business models are so much easier to understand and are really impressive.

What you have already seen is that blockchain distributed ledger is an in-erasable record of bitcoin transactions. The network of computers around the world running bitcoin software will take care of the performance and maintenance of the blockchain network. About six times per hour, a new group of accepted transactions (a block) is created, added to the blockchain and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent.

It is this feature of Blockchain technology that has grown in its popularity amongst large banks, developers and entrepreneurs. Santander Bank, the world’s 10th largest bank, has also been investigating blockchain technology. They have announced that an internal team is working on applying blockchain technology and distributed ledgers on various use cases in the bank. Other international banks like Citi and JPMorgan have also been showing interest in Blockchain technology.

Many startups are building their businesses around blockchain technology. Consequently, VC firms like KPCB are showing interest in investing in these startups. While startups like Coinometrics gather data and research on qualitative and quantitative behaviors on blockchains, there are others like BTCJam who provide bitcoin-based loans. A number of other startups built around blockchain technology include BlockCypher, BitPay and BitPagos. Another interesting startup, Chain, helps companies build financial products around blockchain technology with its bitcoin data API. NASDAQ has chosen Chain to run a pilot around blockchain technology on the NASDAQ Private Market.

With growing applications of blockchain technology and triggers by VC firms like KPCB Edge funds, the day is not too far when the blockchain might disrupt the entire FinTech industry.

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