Blockchain Disruption: Transforming Traditional Finance through Distributed Ledger Technology
No Thumbnail Available
Date
2024-05
Authors
Nair, Lakshmi
Major Professor
Chen, Rui
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Journal Issue
Series
Department
Abstract
Blockchain technology has emerged as a disruptive force in the financial industry, fundamentally changing the nature of financial transactions, record-keeping, and verification processes. The article thoroughly examines blockchain's implications for financial services, including its fundamental principles, real applications, associated advantages, present issues, and potential improvements. Blockchain technology is basically built on distributed ledger technology (DLT), cryptographic hashing, consensus processes, and programmable smart contracts. Using these characteristics, blockchain enables secure, peer-to-peer transactions that do not require middlemen, resulting in improved levels of security, transparency, and operational efficiency in financial ecosystems. Exploring the practical applications of blockchain technology in finance reveals its potential in a wide range of disciplines, including payment systems, remittances, trade finance, capital markets, and the developing realm of digital assets. Blockchain-based payment networks, for example, provide rapid cross-border transactions at a cheaper cost than traditional payment infrastructures. Similarly, blockchain has the potential to improve trade finance processes, lower fraud risks, and increase supply chain financing transparency.
Furthermore, blockchain's ability that mitigate settlement cycles, increase transaction transparency, and allow for fractional asset ownership through tokenization procedures demonstrates its potential to change financial markets. The emergence of digital assets and cryptocurrencies as new investment options highlights blockchain's disruptive impact on financial markets and regulatory standards. Nonetheless, blockchain adoption in banking faces several challenges, including scalability constraints, legal uncertainty, interoperability issues, and privacy concerns. To encourage wider use, measures addressing these challenges must be established, such as scalable solutions, regulatory frameworks, and interoperability standards. Looking ahead, blockchain technology in finance will be impacted by emerging topics such as decentralized finance (DeFi), central bank digital currencies (CBDCs), and blockchain interoperability protocols. These advancements are projected to cause substantial changes in financial ecosystems, emphasizing blockchain's continued relevance and revolutionary potential. In a nutshell, this study demonstrates blockchain technology's disruptive potential for financial services, ushering in a paradigm shift characterized by enhanced efficiency, transparency, and accessibility. It presents a detailed assessment of blockchain's applications, benefits, issues, and future prospects in finance.
Comments
Description
Keywords
Citation
DOI
Source
Subject Categories
Keywords
Copyright
2024