Blockchain Technology Powering Fintech Revolution
Unless you possess an understanding, be it shallow, of what Fintech is, broadening your viewpoint on the Blockchain (or its implications) would be playing hardball. We’ll limit our definition of the subject so it meets the ends of this blog post.
What is Fintech?
The term that is pushed around, and marketed interchangeably with the now fast-fading term Finance, is a 21 century-incarnate of the latter. Finance, as we all understand, is a domain that deals with the details of money management, more or less. The services revolving around money management are Financial services. Conventional Finance rested on paper bookkeeping until digital transformation hadn’t forced businesses against the wall to modernize legacy systems. When unhindered technological change introduced a way to put legacy systems on fast track mode, that was when Fintech was born.
Finance + Technology = Fintech
In simpler words, when technology finds a way to optimize a traditionally resource-consuming, finance-related task, that comes under the territory of Fintech. We already have a whirlwind of Fintech development that is reshaping Consumer to Business (C2B) interaction and vice versa. The global Fintech microcosm is projected to grow with a CAGR of 24.8%. That estimate cap-sizes the industry’s valuation at $309.98 Billion by 2022.
Blockchain-enabled growth among its service sectors is expected to play a major role in this transformation. If you’re new to the concept of Blockchain, you’ll find our in-depth guide on the topic helpful. For this post, its a touch and go for a Blockchain overview.
What is Blockchain?
Blockchain is an ever-growing list of records run on a network. Its system architecture is no different from a database. The records are called blocks cryptographically linked to one another forming a chain. The credibility of the chain is maintained in that the mathematical hash of the last block will be found in the subsequent block. The blocks are added to the network, depending upon the consensus mechanisms deployed by the Blockchain developers. Further properties attributable to the Blockchain include:
- Decentral – No central authority enforces the rules of engagement, placing the trust in the hands of the participating nodes that run the network.
- Permissionless – Anyone can join the network with the requisite computational (mining) power in validating transactions and earning rewards as cryptocurrencies/tokens.
- Data Tampering – Data once recorded using the blockchain technology is unchangeable, at least in theory. The blocks are immutable and near impossible to impose new data on.