Blockchain's surprising transparency makes bankers rethink

Baozou Comment : The application of blockchain technology is affected by various human factors. Its unique nature is both the core element of its advantages and the main reason for the general concern of financial practitioners. However, this trend of technology application has taken shape, and it is impossible to reject the occurrence of progress. Therefore, even if only a few people will participate at the beginning, we should take this as a starting point and gradually expand its influence.

Translation: Annie_Xu

Although blockchain technology is attractive to a group of financial practitioners, it cannot be used simply and casually by us. In fact, many banks are trying hard to integrate the technology into their business. Transparency will become a core issue for most financiers in the future, because they are not yet able to adapt to the situation where all information is made public.

Despite the growing interest in blockchain technology, it will take quite some time for banks to integrate these solutions. While the irreversibility of transactions is a problem in itself, this unprecedented transparency also makes many people feel uncomfortable. Curiously, two major advantages of blockchain are beginning to emerge.

Most people know how blockchain will make the financial industry more efficient. Transaction settlement times could be reduced to hours or even minutes instead of days. And the entire financial process would involve fewer fees, which is certainly not a bad thing. But shared systems expose banks and financial service providers to too much exposure in their daily activities.

At the same time, the immutability of blockchain is not welcomed by the financial industry. Trade and transactions are subject to human error, and the inability to correct errors will also cause long-term cost waste. Therefore, blockchain has once again firmly grasped people's attention, and its benefits to the financial industry will outweigh the disadvantages.

Scalability remains another major issue, as data replication will become a burden on the network. Most financial practitioners are exploring private blockchain technologies that do not rely on proof of work, such as Bitcoin's proof of work. It is also a capability that private ledgers lack, keeping it out of mainstream information.

All of this will lead to future discussions about when and where blockchain will be adopted in the financial sector. Further delays will not benefit anyone, but we also do not support hasty action. Distributed databases are not new, but blockchain technology can provide completely different tools and features, and very few people can adapt to this transition.