These companies apply blockchain in finance to help the banking and finance industries find their stride.
Written by Sam Daley
It makes sense that blockchain technology was first introduced as a way to breathe some fresh air into the financial sector. Originally created at the height of the 2008 global financial crisis as the operational backbone of Bitcoin, blockchain’s distributed ledger technology is a safe and secure method to transfer and catalog data.
In short, blockchain is a public ledger capable of recording the origin, movement and transfer of anything of value. Instead of relying on a central authority, like banks, blockchain requires unanimous approval from the individual nodes in the blockchain to process a payment or transfer a good. The ledger technology is most attractive to the financial sector because it solves many problems plaguing the industry today, namely security and efficiency.
Blockchain subverts institutions in a way that makes today’s current financial industry appear archaic, so it’s no surprise the powers that be in the world of finance are looking for their seat at the table. DLT technology has the potential to expand the global economy to $1.76 trillion by 2030, and this possibility has risen with the popularity of blockchain wallets and cryptocurrencies.
The word “disruptive” is used all too frequently nowadays, especially in the technology space, but blockchain truly has the ability to shake the multi-trillion dollar financial industry to its core.
Here are just a few examples of blockchain in the finance sector doing just that.
Arguably the most impactful application of blockchain in finance is its ability to efficiently establish trust through smart contracts.
Smart contracts are similar to physical contracts, except the stipulations of the contract are fulfilled in real time via the blockchain. Smart contracts are beneficial, especially to the finance sector, for numerous reasons. These contracts are fulfilled instantly after all stipulations are met, do not require any middlemen and add heightened levels of security.
Jeff Garzik, co-founder of blockchain company Bloq, says smart contracts are beneficial to parties looking for very specific outcomes, such as when a contract is fulfilled by both parties following all the predetermined rules and dissolves under violations. A good example of this is investing.
When an individual invests in a company, the rules and stipulations are clearly established between the two parties. The unambiguous nature of the contract is helpful because the blockchain can then enforce those rules using its network of computers to check that all contractual agreements have been met (i.e., the investor has enough money, they invested in the proper amount of shares, etc.) before the investment moves forward.
Smart contract technology is currently at the top of almost everyone’s needs because of its efficiency and privacy. Here are companies instituting blockchain-based smart contracts in an effort to get ahead of the curve.
Founded: 2017
Location: Fully remote
Chainlink Labs is a Web3 services platform that works to enhance smart contracts by connecting them to off-chain data sources. The company is the developer of Chainlink, an enterprise-grade oracle infrastructure that helps financial institutions connect their existing systems to major blockchain networks.
