Fintech is considered a game-changing, disruptive innovation that holds the capability of shaking up the traditional financial markets. Traditionally, the term Fintech was used to refer to the technology applied to the back-end established consumer and trade financial institutions. Fintech illustrates the new intersection of financial services and technology.
After the evolution of the Internet, the term Fintech stands for technology that is disrupting traditional financial services, including money transfers, loans, fundraising, mobile payments, and asset management.
A blockchain is a type of decentralized and distributed ledger for maintaining a permanent and immutable record of transactional data in chronological order. It stores transactional data continuously which a list of documents called blocks. This technology uses cryptography to link and secure these blocks.
The key features of Blockchain can be categorized as follows:
Decentralization: It is a decentralized network to operate on peer to peer basis. It eliminates the risks associated with data being stored centralized as it stores data across its network.
Distributed Ledger: It allows the sharing of a ledger activity such as arbitrary data or virtually anything of value between multiple parties. To ensure transparency and to avoid single point failure, every computer in the distributed network maintains a copy of the ledger. All the prints are updated and validated simultaneously.
Immutable record: Blockchains resist the modification of data by design itself. Specific protocols are adhered to validate the new blocks. The data recorded in the block cannot be altered without the consensus of the network majority.
Why Fintech industry need Blockchain
Blockchain needs less amount of investment, and it is very secure. It stores the data in a different chain, and it is not easy to alter the data once recorded. Blockchain is a series of blocks which allows for tracking the complete chain of the financial transaction. It has allowed creating secure financial products and brings financial innovations.
With Blockchain, the data is centralized, and there is no single authority. The Blockchain potentially cuts out the intermediary, giving back the power to the owner of the assets — data or tokens carrying some financial value.
This technological play of everyday life is expected to become more structured, efficient, and mainstream with the development of Artificial Intelligence.