Blockchain, the Technology that is already revolutionizing Finance...

 If we hear the word "blockchain", we quickly relate it to the technology implicit in cryptocurrencies, especially Bitcoin. However, this technology has many other applications, in the financial field and in other sectors.

From 20 years ago to the present we live in the Internet of Information, the free flow of information throughout the planet. Many experts predict that the next revolution of the network will be generated by the blockchain, the Internet of Value, which allows the sharing of value (titles, files, patents and others) in a digital, decentralized (without the need for a central authority) and totally reliable way. Blockchain, the digital trust: The blockchain is, first of all, a record, a ledger of digital data that is shared among many other parties. Its essence is that, once any information is entered, it can never be deleted or modified, remaining permanently registered. We can consider Blockchain as a distributed database (multiple databases related to each other), which allows transactions to be executed between two or more parties in a verifiable, transparent and permanent way. The blockchain generates a total consensus among its users, all participants have a copy of it. Therefore, blockchain allows trust in any type of business relationship. Main features of Blockchain: Blockchain technology has the following advantages, essential in any economic transaction: Security: Absolutely nothing can be modified or deleted, only progressively added. This means that once the transaction has been made, the system cannot be manipulated dishonestly. Transparent: It is a register or "ledger" in which the different transactions carried out are stored, which can only be accessed to consult, without being able to modify said transactions. Therefore, the veracity of the information is guaranteed. Trust: Decentralization and the lack of a central node where all the information is collected, makes the parties involved fully trust this technology. Cost and time savings: Significantly reduce the tasks of recording and controlling data in transactions. The blockchain avoids duplication of records, only one record regardless of the number of participants (without Blockchain, if there are three participants it means that each of the three parties performs the registration of the transaction). Real-time transaction: Its immediacy (taking into account that there are no timeouts) minimizes the counterpart risk produced in other transactions where the payment commitment takes several days to execute (avoiding risks of non-payment, bankruptcy, fraud, etc... during the entire payment process). On the other hand, its drawbacks stem from the scalability problems of blockchain. The scalability of a system is the ability to grow in volume and manage the increasing workload. In blockchain, scalability is measured through the transactions that can be processed in a given time. Scalability issues can be slow compared to other centralized systems (most payment systems). Each block that is created has a certain limit of transactions, if many transactions enter in a time interval, the waiting times increase. Another problem with this technology is the issue of regulation, it is not known what kind of regulation the Central Banks (Europe and the United States) will carry out in the future regarding this technology applied to finance.

Blockchain applications in finance: As we mentioned initially, the blockchain does not only have application in cryptocurrencies. Here are some of the possibilities offered by blockchain in finance: Smart contracts: One of the most important blockchain developments was made by the Ethereum Blockchain, through smart contracts or Smart-Contract. Smart contracts are applications that operate like computer programs and are executed through Blockchain, in a decentralized way. To simplify, a smart contract is a software code that will run on its own under certain circumstances agreed in advance between the parties. They usually include a financial transaction. For example, if the value of oil falls to a fixed price, an amount of money is invested in a certain stock, in the same way that the Stop Loss works in the international currency market. Smart contracts will provide financial services in the future without the need for intermediaries. They have endless possibilities: Online voting systems, Insurance, Betting. Smart-Contracts incorporate the main features of Blockchain (immutability, security and transparency). Perpetual identity: Digital identification is becoming increasingly important in the financial world. Having the certainty that a user is really the owner of a digital financial contract is vital. With all this, the introduction of a personal identity (Passport, deed) in Blockchain guarantees the veracity of the identification. Some experts say that in the near future there will be a blockchain accessible to all financial actors, where it will be possible to obtain digital identification. Thus, once the ID has been entered in that registry or blockchain, any bank or fintech will be able to access the ID (with the user's authorization). Therefore, any user will only need to enter their ID or passport once. Digital payments, Stellar or Ripple: There are very efficient digital currencies in international payments and micropayments: Ripple: Specializes in cross-border payments (payments between different countries). Ripple's system is designed for financial institutions and payment providers around the world. This technology prevents cross-border transactions from going through intermediaries. Stellar: It is an ideal platform for micropayments, due to its speed, low commissions and equitable treatment between users. Some financial institutions are starting to develop processes through Blockchain in various business areas. Issuance of securities and digital assets: Blockchain technology allows companies to issue securities or digital assets (a real estate, a financial asset, a cryptocurrency...). Once the assets are entered into the blockchain, they can be exchanged between different companies. This transmission of digital assets facilitates trade and collaboration between companies. Other Blockchain financial developments: Undoubtedly, cryptocurrencies are the sector where blockchain technology has been developed the most. Blockchain technology was born as the essence of bitcoin and is currently present in most digital currencies. Other financial sectors have also found solutions in blockchain. For example, the American stock market Nasdaq uses blockchain on its private exchange. Blockchain, the technology that will revolutionize the Internet: Initially, Blockchain started in the shadow of bitcoin, but little by little, the blockchain has been implemented in different sectors (finance, medicine, food...). Many governments and multinationals are taking positions on blockchain, investing millions of euros to implement this technology in their organizations. For years, the "Internet of connectivity and information" has changed the way we live, think and relate. For many, blockchain along with new digital developments (Big Data, IoT, Artificial Intelligence, cognitive system...), will be part of the next digital revolution. In fact, Blockchain will allow the sharing of value (titles, files, patents...) in a digital and decentralized way in most economic sectors. Thus, the development of the blockchain is not directly related to the evolution of digital currencies. Despite the questions about cryptocurrencies, we can classify blockchain as a technology that will revolutionize the digital world.

Alejandro O. Asharabed Trucido

Neura.Blockchain@aol.com

+54911 5665 6060

Buenos Aires,  04 de diciembre de 2024