Recent Innovations in the Application of Blockchain to the Financial Sector and Associated Industries

RECENT INNOVATIONS IN THE APPLICATION OF BLOCKCHAIN TOTHE FINANCIAL SECTOR AND
ASSOCIATED INDUSTRIES
Financial sectors analysis
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Table of Contents
Introduction...........................................................................................................................................1
Problem statement................................................................................................................................1
Technology formulates a digital and distributed transaction ledger.....................................................2
Use of blockchain in investing capital....................................................................................................2
Trade financing and blockchain.............................................................................................................3
Advantages of use of blockchain technology.........................................................................................4
Process of blockchain technology..........................................................................................................8
Conclusion.............................................................................................................................................8
REFERENCES....................................................................................................................................10

RECENT INNOVATIONS IN THE APPLICATION OF BLOCKCHAIN TO
THE FINANCIAL SECTOR AND ASSOCIATED INDUSTRIES
Introduction
With the changes in time and ramified economic factors each and every organization are
inclined towards using the advance technologies and system process in their value chain
activities to expand the business on international level. It is analyzed that everyone has heard
that, “NECESSITY IS THE MOTHER OF INNOVATION” and it keeps business to win
overthe market in the competitive business environment. This is not just a phrase, but the
fact. Especially when we talk about business, nowadays there stand a stiff competition among
all the industries. It’s not about competing with the other business party but with self also.
The business organizations and corporations who tap the opportunities at the right time stand
at a step ahead of their competitors and the ones who strategize at the correct time when the
threats arise are also at an excel footing than the others. As far as financial sector is
concerned, this industry specifically needs high end inventions to help the whole economy
harness the multiple opportunities available for growth. Recent advancement in this sector
tends to be that of Blockchain technology. The blockchain technologies are used to develop
growing list of records by using the cryptography. It is also described as global network of
computers to jointly manage the database that records bit coin transactions. Although, the
technology is certain to have enormous potential but at the same time has to deal with several
issues which are demanding urgent attention or could deliver the negative outcomes to
companies and investors at large. Therefore, use of the blockchain and risk associated with
the same will be completely based on the internal and external factors of the financial sectors
(Aitzhan, and Svetinovic, 2016).
Problem statement
Financial sector has emerged as the core of the whole economy by providing financial
services to the commercial and retail customers. It is the market where investors and
borrowers meet to help each other’s while satisfying their ultimate objectives. By financial
services, it means the economic services that involve managing money. All the organizations
are facing high complexity in the financial business due to the increased complexity. The

banks, credit card companies, insurance companies, accountancy firms, credit unions,
consumer-finance companies, stock brokerage houses, investment funds etc. all come under
the umbrella category of finance sector. The most important of all being commercial banks,
which stand as the backbone of all the money related activities as the monetary requirements
of all big business houses are fulfilled by them. The customers can be retail as well as
commercial (Aitzhan, and Svetinovic, 2016).
Technology formulates a digital and distributed transaction
ledger
With the ramified changes in technologies, Blockchain technologies have been gaining
momentum throughout the time. Blockchain technology has got its name from the way this
technology processes functions. Basically, this technology work in blocks and form a chain,
blocks being a budding list of records. The chain is the linkage of this list of records using
cryptography. Blockchain strictly adopts privacy and is resilient to any alteration of
information (Crosby, et al. 2016). Although the information is secure yet it can be read using
crypto currencies. In the early phase blockchain was not used as a single word but as block
chain. The whole concept belongs to Satoshi Nakamato, who abstracted it in year 2008.
When financial sector is sought, the concept of bitcoins and other cryptocurrencies which
work on the blockchain technology is highly prominent (Bonneau, et al. 2015). Blockchain
technology formulates a digital and distributed transaction ledger. Alike copies of such digital
ledger are kept on all the computers of the members of network. This means that the data can
be managed independently by all the parties.
Use of blockchain in investing capital
The autonomy provided to the members of network allows them the power to review and
record entries. There is no intermediary party which makes the security of transactions the
top priority. As discussed already, the blocks are the data entries and the chain is their
security maintained by cryptography. The key features involve maintenance of a record of all
data exchanges where the records are called as “ledger” and data exchanges are called
“transactions”; presence of a distributed and not a centralised system; and zero alteration after
verification of the transaction. The security issues and increased return on investment in the