People that suffer from FOMO (Fear Of Missing Out) aren’t the disruptors of this world. They’ll follow trends, and deploy new techniques because they see others do the same. This often results in them spending money on things they don’t understand so they’re missing out on the important things. But when it comes to Blockchain, FOMO is real. Not because you’ll suffer when you don’t get involved, but simply because it would be a wasted opportunity. The Blockchain technology is about to knock the socks off traditional bankers, and you can be a part of the movement. And if it’s your socks that are on the line, you can use the current developments to adapt. Because believe me: you don’t want to miss this.
First tell me what’s Blockchain
Before you join a movement (any movement at all), you should know what you’re dealing with. Blockchain is the tech behind, among others, the bitcoin, which is a digital currency that isn’t owned by anyone or any bank. To store, process and exchange those bitcoins, Blockchain databases are used, so that people who own bitcoins can use them all over the world (just like we do with “real” money). You might say they are the digital equivalent of ledgers. However, unlike ledgers, Blockchain databases are decentralized and independent, which makes them more flexible. They function just like Google Drive, where anyone who has editing rights can make changes to a document and share it with others in real time. This means that everyone’s copy will be kept in sync and differences are being avoided. As opposed to Google Drive, you can only edit the Blockchain parts that you own. Moreover, all the information that’s already there can’t be modified, meaning you can only add new information, which must be in line with what’s already been reported.
What does this mean in real life?
Virtual as they may be, bitcoins are real. Which means they can be stolen. But although the Blockchain concept is quite new and fully digital, Blockchain databases are hackers proof. You can’t change the balance on your account; you can only do transactions. This means that you can’t move value that’s not there. So, if you want to transfer bitcoins to another account, you can only do so by using the bitcoins that were added to your account in the previous lines. To make this story even better, cryptography makes sure that you can only edit Blockchain parts that you own, which makes it pretty much impossible to mess with someone else’s account. Last but not least, the information in Blockchain databases is exchanged in a peer-to-peer way, meaning transactions aren’t centralized but take place all around the internet. So even if someone manages to hack a part of a Blockchain database, not everything would be lost.
Why do banks need this?
In my opinion, Blockchain comes with three main advantages for the banking industry. First, it enables financial players to facilitate safe money transfer, through a decentralized network between users who cannot sabotage previously entered data. This not only makes firms more trustworthy, it also saves out on money because of a reduced number of hacking attacks. Second, Blockchain is the answer to the many demanding customers that want speed, efficiency and transparency. You can “teach” a Blockchain database when to pay a bill, for example when a certain number of criteria has been met. The technology puts customers in control of their digital possessions, which will improve confidence between them and firms, fellow customers and third parties. This also means that client checks only need to be done once, and can be shared with other organizations. Third, Blockchain opens up a whole new world of collaboration. The Blockchain technology can be used to build a trading platform that is transparent and fraud resistant. Forbes reported that NASDAQ and the Australian Securities Exchange already experiment with such a platform.
“We can use the Blockchain technology to enable any kind of transaction between information systems. And that’s where it gets interesting to all of us”
What can Blockchain do for the non-bankers among us?
With the Blockchain technology, we can do more than creating extreme secure financial transactions. Sally Davies, technology reporter of the Financial Times, says that Blockchain is to currency what the internet is to e-mail. This underlines the diversity of Blockchain and means we can also use the technology to enable any kind of transaction between information systems. And that’s where Blockchain gets interesting to all of us. Thanks to Blockchain databases, we can transform the internet into a place where information and assets can be viewed, exchanged and communicated in real time. Apart from the banking and financial industry, this will affect the academic world, real estate, healthcare, insurance, legal, and the public sector all over the world. Think about all the information flows that could be made more reliable, fast and private! Told you FOMO was real.
Not to mention it’s open source…
There’s a reason why we’re such Blockchain fans. The technology includes everything we believe in: open standards, freedom of choice, transparency, safety, customer-centricity, speed, efficiency, and many other positive terms. I completely understand why Blockchain has become such a buzzword: it incorporates the new way of doing business using smart technologies without the need for an intermediary. Sure, you can decide to ignore the Blockchain movement and hope the hype will blow over. But when technology offers you this many benefits on a silver platter, I suggest you embrace it.