Blockchain, Big Data, and digital payments are new technologies to benefit many businesses. They will significantly impact the organizations’ operations in the coming years.
These technologies have experienced significant growth in the past ten years. Combining them helps businesses achieve efficiency, transparency, and cost-effectiveness. Here, you can learn about these technologies, how they work, and their applications in the future.
What Is Blockchain?
A blockchain is a shared database. It is distributed among the nodes of a computer network.
It stores information electronically in digital format. It is different from a typical database. The main difference between them is the structured data.
A database usually organizes its data into tables. However, the blockchain collects information in the form of blocks. Blocks contain information in groups. Blocks have a specific storage capacity; when it is full, it forms a new block. It forms a chain of data, which is known as the blockchain.
The cryptography links together the blocks. Blocks can store various types of information. However, most companies use it as a ledger for transactions.
Who Invented Blockchain?
Stuart Haber and W. Scott Stornetta are two mathematicians who outlined blockchain technology in 1991. They tried to implement a system where timestamps are immutable. Cypherpunk Nick Szabo proposed using a blockchain to secure a digital paymentsystem in the late 1990s. However, he never implemented it.
Blockchain and Big Data are also great combinations. However, bringing these technologies together will require a lot of money and time. However, once it is done, it will benefit the entire financial industry.
How does blockchain work?
Blockchain aims to allow everyone to record and distribute digital information. However, it doesn’t allow anyone to edit it. It is also famous as a distributed ledger technology. It forms immutable ledgers that no one can delete, alter, or destroy.
It comprises three essential concepts, including nodes, blocks, and miners. Every chain consists of several blocks. Each block has three essential elements: data, nonce, and hash. Miners create new blocks on the chain. Miners also use special software to find a nonce by solving extremely complex math problems.
Its concept was first used in Bitcoin in 2009. Since then, the use of blockchain has become widespread. It is also used to create various decentralized finance applications and cryptocurrencies. Smart contracts and NFTs are also based on their concept.
What are the Advantages of Blockchain?
Many industries are adopting blockchain technology as it has many benefits. Some benefits of blockchain include:
● Cost Reductions
Usually, a consumer needs a third party to verify a transaction. However, blockchain removes the need for third-party verification. Eliminating it helps reduce costs associated with tasks. You can accept money via Bitcoin instead of credit cards or other payment methods. The current electronic payment systems has moved us to digital age, but these systems are costly and time consuming for international payments. crypto payments make international payments cheaper and faster. These transaction are peer to peer (P2P), which allow money to flow directly from user to user, bypassing traditional banking channels, making it a truly disruptive form of FinTech. Experts believe that P2P DeFi transactions are likely to disrupt the traditional finance.
● Accuracy of the Chain
Blockchain removes almost all human involvement in its process. A network of thousands of computers approves the transaction on it. It offers accurate results since no human error occurs. Even if a computer makes a mistake, it will not affect its accurate result. The mistake only occurs when half of the network’s computer makes the same error. However, thousands of computers can’t be wrong.
● Decentralization
It does not store any information in a central location. Instead, it copies and spreads it across computers’ networks. It automatically changes when a new block is added to it. Spreading it across the network is better than storing it in one centralized database. Decentralization helps keep data safe from hackers. Even if hackers get their hands on a copy of the blockchain, they can’t hack the entire network.
● Private Transactions
Many blockchain networks operate as public databases. It is possible to view a list of the network’s transaction history. However, you cannot access identifying information about the maker of transactions. It offers privacy to the person making transactions.
● Efficient Transactions
Transactions via bank can take up to a few days to settle. However, blockchain works and can complete a transaction within a few minutes. Generally, people use it for cross-border trades that take longer to process.
● Transparency
It offers transparency since it is open-source software, meaning anyone can view its code. Anyone can suggest changes; if the majority agrees, it will be updated.
● Secure transactions
The blockchain network verifies the authenticity of the transaction. Each block contains its hash on the blockchain. When the computer modifies the block, its hash code also changes. If someone tries to change the block, everyone will notice the change.
● Financial Inclusion
Anyone can use this technology regardless of gender and ethnicity. If you don’t have a bank account, you can store your money using it.
What are the Blockchain Applications in Finance Industries?
Blockchain is capable of storing data about other types of transactions. Many industries can use this technology and get its benefits.
The banking and finance industries benefit most from it. Most banks operate 5 days a week, i.e., during business hours. If you deposit a check after business hours, it will be troublesome for you. Your request process will continue next Monday. It will delay your business and have a negative effect on it.
Banks that use blockchain can provide a transaction process even without working hours. It also helps banks to move funds more securely and quickly. You can get quick transactions via blockchain technology.
What is Big data?
Big data refers to the large, hard-to-manage volumes of data. It contains both unstructured and structured data. It grows exponentially with time making it inefficient to store or process. An example of big data is the New York Stock Exchange which generates about 1 terabyte of a new day every day.
There are three types of big data: unstructured, structured, and semi-structured. Data in a fixed format that you can easily store, access, and the process is structured data. Data in an unknown format is known as unstructured data. Semi-structured data contain both types of data.
Big data has these characteristics, including variety, volume, variability, and velocity. It has many benefits for different types of industries.
How does Big Data Work?
It is based on these five concepts:
● Plan a big data strategy.
● Identify the big data sources.
● Access, manage, and store the data.
● Analyze the data.
● Conclude intelligent and data-driven solutions.
What are the Advantages of Big Data Processing?
Some advantages of big data processing include:
● Improved customer service.
● Increase operational efficiency.
● Businesses can use outside intelligence while making decisions.
● Early identification of risk to services or products.
What are digital payments and their purpose?
It is a process to provide transactions via online mode. It eliminates the involvement of the physical exchange of money. It usually converts a traditional cash-operational society into a cashless one.
Many organizations use it because of its concepts. It increases transparency among monetary transactions and reduces the risk and cost of handling cash.
Blockchain, digital payments, and Big data in the Finance Industry
Converging blockchain, digital payments, and Big Data will help reinvent the finance industry. These technologies have different concepts and benefits, which can help in a digital transformation.
Big data analytics are essential for organizations to use blockchain. Blockchain benefits from using big data analysis. They will help financial institutes to find new strategies on a blockchain. It helps identify trends and threat models through data exchange and production.
Blockchain ensures data privacy and storage. It helps increase the data integrity.
Big data ensures the data’s velocity, variety, and quality. Digital payments increase the ease of doing online transactions.
Blockchain can perfectly comply with digital payments and big data requirements and challenges. It helps develop an unbeatable data digitization technology. Not only the finance industry but other industries will also utilize this technology.
The benefits of Blockchain in Big Data Transformation
● Take control of data sharing
A blockchain network can help when sharing your records with any other sector. It reduces the risk related to the network of separate data silos. It helps project teams to avoid duplicating data analysis.
● Improve data security
Blockchain offers a decentralized system that can increase the security of data. No single person can change the big data without consulting all parties.
● Preventing fraud
Big data lacks the power to detect fraud in the financial services business. However, blockchain is effective in detecting suspicious patterns in real-time.
● Data monetization and sharing
Data is vital in today’s society. Combining these technologies help organizations to improve their way of sharing and monetizing the data.
● Streamline data access
By adding databases to a blockchain, organizations can have a common immutable source of information. It makes data access more smooth and available to everyone.
The Bottom Line
Blockchain technology is still very much in its infancy and going through a lot of experiment. Strong supporters of blockchain technology anticipate that cryptocurrencies and blockchain will completely replace banks. Others believe that blockchain technology will improve the efficiency of the current financial systems by supplementing it. It will be interesting to observe how far banks adopt these technologies. But one thing is certain: the finance industry will be transformed by blockchain.
Read Also: What Is The Role Of Blockchain Technology In FinTech Industry?
Written by: Sunaina Meena | Edited by Arun Shakyawar
About the Author
Sunaina Meena is a content writer with MIMO Technologies, a supply chain service provider.
