How Blockchain Can Help the Financial Industry

As an important technological innovation in the field of financial technology, blockchain is regarded as the core key technology for building the future Internet business format, which can realize the upgrading of the Internet from information interconnection to value interconnection. In fact, the blockchain is a shared ledger or database that adopts a consensus mechanism, decentralization, and distribution. Through cryptographic encryption technology, the entire network of this ledger or database is guaranteed to be open and transparent. Consistency, its distributed group The network mode and the irrevocable and tampered characteristics of encryption ensure that encrypted information can be quickly transmitted and traded in a safe and confidential manner in a point-to-point manner. Although blockchain technology is still in its infancy, as the core technology of a decentralized accounting platform, blockchain is considered to be widely used in finance, credit reporting, teaching, medical care, the Internet of Things, economic trade, smart devices, etc. fields have broad application prospects.
Blockchain technology takes cryptography, network-wide shared ledger, and distributed consensus mechanism as the core, and builds a distributed ledger system that does not depend on the operation of any specific third-party central organization. Blockchain has the potential to change the infrastructure of the entire financial industry, which in turn has a profound impact on the entire industry.
The application of blockchain technology in the securities industry should be said to be mainly concentrated in all aspects of the post-trade process. This technology can reduce post-trade costs and risks. Some people even think that it can make post-trade settlements possible. Shorten settlement times and more.
The use of blockchain technology to solve some problems in the post-trade settlement of securities is because the existing post-trade process of securities is quite inefficient. The reason for the low efficiency is that both parties to the transaction must maintain their own transaction records and fulfill The resulting counterparty relationship, which results in the counterparty investing many unnecessary resources to check data at every stage of contract execution. Therefore, the shared distributed ledger has attracted the attention of relevant subjects. It is believed that it may be able to store all transaction information related to the execution of transactions in a form that everyone agrees with and authenticates to share with all participants.
Some institutions have made a general estimate of the cost of the post-trade settlement process in the securities industry. For example, Morgan Stanley has estimated that the global post-trade processing cost alone will be as high as 25 billion US dollars, and this is not the entire post-trade process. All costs of the link - if you add up all the costs of the relevant post-trade links, it may be more than $100 billion. This is a huge cost. It is believed that if blockchain technology is used to transform the post-transaction process, at least 50% of the post-transaction process cost can be saved.
So far, the entire securities industry believes that there are some basic judgments in at least several aspects when blockchain technology is used in the securities industry.
1. If blockchain technology is used in the securities industry, it must be a blockchain such as a so-called private chain, not a public chain.

2. If the blockchain technology is to be introduced into the securities industry, it must go through a stage of gradual advancement, that is to say, it may first be used in some scenarios where there is no centralized safe depository to process and record ownership. Down.

3. A current understanding is that if blockchain technology is to be applied to the securities industry, it will definitely involve a comprehensive transformation of the existing post-trade settlement process—process reengineering.

Only by doing these three points should it be said that blockchain technology has gained a relatively common application in the securities industry.

Blockchain is a decentralized distributed ledger database. Further analysis can be understood as: This is a distributed ledger that can only add content. All transaction records stored on it are determined by time series. Secured by links, provable signatures, and cryptography, these records are replicated across a network of computer nodes, and a software-driven consensus mechanism continually adds new records. It's not that credit can't be calculated, it's that we haven't yet constructed an environment or system that can calculate it accurately. It is conceivable that the blockchain will build a digital-based global credit system, gradually change the way people trade in the market and optimize the system of distributing profits by value.

Related Articles

Explore More Special Offers

  1. Short Message Service(SMS) & Mail Service

    50,000 email package starts as low as USD 1.99, 120 short messages start at only USD 1.00