As a financial professional, you know you need to keep on top of the latest technology and processes that could affect your business. But given your responsibilities and workload, it’s no wonder if you don’t know the nuances of some of the latest financial technology (FinTech) that’s hit the streets. Some of that technology, blockchain in particular, has far-reaching potential into our everyday business world. Did you know that there’s a Congressional Blockchain Caucus? Regardless of politics, I think it’s great that the government is taking blockchain seriously.
In a Nutshell
So, what is blockchain? The bare bones is that it’s a technology that uses an open network of computers to transmit and store transactions. Think of a single wire transfer of funds as an example. Each transaction is a “block” and once the sender (with a unique ID) initiates the transaction, multiple disinterested parties mathematically verify their identity and confirm the data – in this case, the funds – and then it’s transmitted to the receiving party, who also has a unique ID.
All of that happens in about 10 minutes. Forget electronic banking as we know it. No middlemen, banks in this example, are needed. As Doug Sleeter pointed out in an excellent three-part series he wrote for AccountEX Report, each transaction or block, has a unique fingerprint of sorts that is recorded in a ledger that is transparent and available to anyone. Think of it like driving a Formula One car and you’ll understand how exciting and scary blockchain is.
Blockchain can change the way we work. The digital currency, Bitcoin, is exchanged – and valued – via Blockchain. Would we need a notary or even a lawyer to verify contract signatures? Probably not. The same goes for payment processing. You owe me $100 and pay it using blockchain technology. I know that you, and the funds, have been verified and the money goes into my account. Would we need to record the transaction the way we currently do? Probably not. Would you ever need to follow up with me to see if I received the funds? No. Would the funds ever go to the wrong party? (That never happens now, right?) It seems like the answer to that would be no as well.
Can you imagine anything that could disrupt the financial sector more than how we move money, exchange ownership, and manage our assets? I don’t think I can. There is so much going on in FinTech with mobile payments, crowdfunding, cryptocurrencies like Bitcoin and a dozen alternatives, and so much more. And that’s all on top of the changes we’re seeing in technology that are making more predictive analytics and automated processing possible thanks to the cloud and other advancements.
If you’re not “into” technology, it’s going to a bumpy ride but you can take solace in knowing that you’re not alone. Even the most tech savvy controllers and CFOs are having their heads spin with all of this as they try to stay ahead of the curve.
What are you most excited …or concerned about with blockchain and all the rest? It’s time to start digging into it and take it bite by bite.
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