Although blockchain is, first and foremost, a tool for dealing with security, reliability, and transparency of transactions, its application in various fields is gaining momentum. It ceases to be technology only for mining and ISO.
Although blockchain is, first and foremost, a tool for dealing with security, reliability, and transparency of transactions, its application in various fields is gaining momentum. It ceases to be technology only for mining and ISO. For example, in the financial industry, we work closely with, blockchain is used to build trading platforms, wealth management, bookings & reservations, and more.
Blockchain solves the challenge of trust and is capable of revolutionizing all areas where people interact: finance, identity, workflow, health, the internet of things. The basic principles of blockchain: transparency, distribution, and neo-rotation. Blockchain is first and foremost one of the most secure ways to store and open data.
At first, many traditional financial institutions tried to circumvent cryptocurrencies, as the absence of a central regulatory authority in this network terrified them. But now, the primary fears of financial giants have dissipated. And now blockchain technology has ceased to be perceived as a weapon aimed at destroying the banking system and has become a means of improving it.
The most common derivative is futures, it is a contract for the purchase of goods (cryptocurrencies) in the future, at a price already set at the moment. This allows the buyer to insure themselves against excessive price increases – but it means additional costs if the price of the goods decreases.
Essentially, derivatives are designed to protect your open positions in stocks, bonds or bitcoins. Financial instruments, such as futures and options, will provide an opportunity to hedge risks and also help stabilize the exchange rate. Many companies and individuals are betting on the long-term prospects of Bitcoin, hoping that the value of the currency will continue to grow.
There should be protection methods for those who hold Bitcoin, without replacing it with fiat, and these tools should preserve assets in the long term. Hedging – the general financial procedure used in traditional markets – is one of the methods that can help people and companies maintain their assets if the price drops. The idea is quite simple – the leaders of cryptocurrency companies need to look for ways to hedge risks and, as a result, reduce the rate of volatility.
Blockchain as Distributed Ledger Technology (DLT) can be considered one of the most important innovations in the financial sector since the advent of money. The DLT was ideally suited to improve the infrastructure of global financial services.
Despite the fact that the Internet and digital technologies have already transformed many traditional industries, they have not been able to completely transform the financial sector. Even large financial institutions such as Western Union still use sophisticated infrastructure for simple operations like sending money abroad.
Deposits, loans, and other banking services in traditional currencies are criticized for insecurity and vulnerability. The banking sector has become increasingly closer to the blockchain, as decentralized banking systems are not under the control of one organization and carry fewer risks.
Currently, the phenomenon of cryptocurrency and its impact on the development of the financial system both on a global scale and at the national level are of considerable interest. Undoubtedly, the most interesting is such a blockchain system as Metahash, which is characterized by a high level of security, transparency and speed.
In the existing system, the central registry is a kind of custodian of the information recorded in it. But in the blockchain, this information is stored openly in a public database without any intermediaries. Blockchain proponents claim that in such a system, users trust each other since everyone is equal and there is no one who could abuse their dominant position.
In the financial services sector, blockchain makes it possible to completely review the existing structure of banks, speed up settlements, upgrade stock exchanges with due security at all stages.
Thanks to the blockchain technology, you can get rid of third parties participating in financial transactions, you can store and transfer funds to each other without the participation of the bank because as we have already said, the blockchain system has successfully implemented the ability to verify identity, register transactions and conclude contracts. Also, decentralized platforms can be used to manage stocks and assets, to manage transport and logistics processes; trading; tracking the origin of goods and materials; optimizing supplier identification, signing procurement contracts, auditing and transaction tracking.