How Blockchain is Improving Financial Services

In ITProPortal, Maxim Zavgorodny, Senior Developer at DataArt, examines the shortfalls of the existing financial transactions model and the potential for transformation through the use of blockchain, presenting a step-by-step guide to developing Ethereum-based distributed applications.

“Financial services built on blockchain technologies provide the following benefits:

Efficiency: Banking systems must maintain a ledger, which is a complete record of financial transactions over time. With traditional solutions like relational databases, financial institutions are required to develop custom solutions and keep multiple databases in sync with each other across different institutions. A blockchain forms a network that replicates an entire ledger to participants natively; there is no need to develop custom protocols to synchronise and secure financial transactions.

Performance: Since data is natively divided and distributed into multiple servers, it is easier and faster to retrieve information with blockchain solutions. There is no need to route requests to a central system, which may be located in a specific zone or country. Instead, blockchain requests are automatically routed to the nearest node in the network.

Scalability: As of today, blockchain solutions can settle thousands of transactions per second (as a benchmark, the VISA payment system processes an average of 2000 transactions per second). New solutions such as the lighting network with off-chain channels will increase throughput to hundreds of thousands of transactions per second.

Security: Blockchain provides foundational built-in mechanisms to protect information such as immutable data records, transactions signed with private keys, and stores data across the entire network. Those attributes create a framework for building trusted and secure applications in the developing world where corruption is widespread. Blockchain-based applications address institutional weaknesses by restricting mismanaged and malicious transactions.”

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