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Blockchain Technology is the new technology innovation in market which has started creating lots of noise these days. Particularly in the Banking & Financial Services Industries. Blockchain Technology can be considered as an extension of the Bit Coin Technology which is already known in market and which is being used as an alternate channel for funds-transfer based on the digital currency concept.
Blockchain Technology helps in creating a centralized ledger of all the transactions conducted using bitcoins. These bit coin transactions get grouped into blocks using Blockchain Technology and then the blocks get stacked on top of one another over time. This stacking is done by storing a proof of the earlier blocks. This forms the Block and Chain elements of Blockchain Technology.
First, a block is created by the individual transactions conducted using Bitcoins. This is based on the transfer of bitcoins between individuals conducting the transactions. This block is then verified through a network of computers or in Bitcoin language “nodes”. Once the block is verified, it is then linked onto the Blockchain.
How security of transactions is addressed
From start to finish, the Blockchain is bolstered with security measures ensuring that transaction records stay permanent and transparent. Once information is written into a transaction on the Blockchain, it is impossible to remove it.
Every user can access the entire Blockchain, and every transfer of funds from one account to another will get recorded in a secured manner using mathematical techniques derived from cryptography. By using Blockchain, individuals can transfer funds or purchase anything online securely without the need to have a bank account which is generally vulnerable for hack attempts. Blockchain’s design is inherently resistant to the effects of hackers, though it is not invulnerable. The significant risk may arise from Blockchain’s “permission less” design in which anonymous computers can participate in the collective maintenance of the public ledger.
No Personally Identifiable Information (PII) is written while using Blockchain Technology. Instead, a string of characters representing an account or personal wallet, gets recorded into the centralized ledger. As Blockchain transactions are recorded using public and private keys arrived based on complex cryptographic algorithms, people can choose to remain anonymous in their online transactions. Also, Blockchains can help in keeping track of fund transfers and in ensuring that the data collected will be going through a security verification process.
Blockchain Technology helps in shifting the funds transfer process from third-party financial institutions and intermediaries, to thousands of nodes (computers) on the Blockchain network that collectively maintain a public ledger of verifiable transactions. Another important function of the Blockchain is that it validates the availability of funds or assets of each party in a transaction. These functions significantly reduce transaction costs and facilitate immediate and direct transfer of funds or assets. According to a recent report from Santander InnoVentures, banks alone could save $15-20 billion per year by 2022 by using Blockchain technology in support of cross-border payments, securities trading, and regulatory compliance.
It is not just individuals, any organizations can use Blockchain Technology to store their critical records in a secured manner. Major Banks of the world have already embarked into initiatives based on Blockchain Technology. Microsoft, IBM and Google kind of Technology giants also have started working on Blockchain projects. In the United Arab Emirates, the government itself has already formed a Blockchain Technology Council for managing and supporting Proof Of Concept (POC) studies and pilot projects driven based on Blockchain Technology.
Definitely Blockchain Technology is emerging as a juggernaut in secured online transaction platform by promising more secured and hassle free online transactions.
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