Blockchain and cryptocurrencies are topics that we are actively pursuing on our technology radar. A disruptive effect underscores the technology, in particular for the financial services sector, which will fundamentally change the role of banks. What does blockchain mean exactly and how will this technology change how we deal with money and capital investments in future? How is Finnova positioned in relation to this topic and in which form will the concepts influence our future service offering?
What is blockchain?
Blockchain is a technology that interlinks transactions of a digitally representable value and saves them in immutable chain of blocks, the so-called ledger. This immutability is ensured by a consensus for the insertion of a new block, by a distributed network in which each participant has a copy of the ledger, and by cryptographic procedure. The most well-known consensus protocol is the proof of work, in which a participant designated as a miner solves a moderately difficult calculation task.
What does blockchain signify for the financial services sector?
If I wish to ensure the ownership rights for a good or the validity of a contract, I need an officially authorised intermediary that all parties involved trust. In the financial services sector, these are banks, for example, and notaries in the case of contracts. These intermediaries make transactions tamper-proof. Blockchain now provides a technology to make such transactions immutable and thus tamper-proof without intermediaries. The first application was the bitcoin currency. In addition to trading with cryptocurrencies, numerous applications in the area of corporate and trade financing, client onboarding, insurance, real estate, protection against money laundering, or also in the areas of audit and regulatory compliance and identity management stand out.
Blockchain at Finnova: Fields of action
From the numerous fields of action, Finnova identifies one strategy suitable for the Community, and is testing service offers together with partners for possible business models. Cryptocurrencies such as bitcoin are the application most frequently mentioned. In fact, blockchain can do more – it is suitable for innovative business models and the safekeeping of documents and information of all types.
Up to now, the banking sector has only investigated to some extent how great the potential of this new technology really is and how risks present themselves. The future of blockchain is still uncertain. One thing is for sure – who ever wants to explore the potential of blockchain and benefit from it must grapple with the technology and its possible use.
Developers are working on these and many other topics to get a grip on the teething problems of blockchain echnologies. Approaches develop from this, which we test precisely to decide whether the technology has potential and will prove to be disruptive, or whether it is only a flash in the pan.