Since its conception, experts believe that blockchain will bring about limitless possibilities and potential. Blockchain technology is considered one of the most important elements when it comes to the financial technology industry or Fintech sector comprising cryptocurrencies such as Bitcoin and other altcoins. The blockchain technology works as a digital ledger that permanently records the entire history of a coin’s transactions reducing redundancy.
Coupled with security measures, this prevents third-party hackers from tampering such information while also reducing the need for middlemen interference. Due to this new kind of technology, people have been looking into the blockchain tech as a means to secure assets beyond cryptocurrency.
Some of the blockchain trends in 2019 include:
1. Improved relations between banks and traders through blockchain technology
The Fintech industry has been around for a while, but there are still those in the financial industry that have trouble accepting the blockchain-driven currencies available. Many people believe that once cryptocurrency replaces fiat currency as the primary investment tools, banks, and other financial institutions will cease to exist. However, this notion couldn’t be further from the truth since blockchain can actually improve the relationship between banks and traders.
In 2019, it can be predicted that one of the ways to integrate blockchain into the financial sector is by introducing whole new security yet transparent system much like BIN Checker. However, unlike previous financial industry technologies, blockchain can be used to trace previous transactions of said coins including to where it was first mined.
Another example of how blockchain can benefit banks is the introduction of hybrid blockchain technologies. Back then, blockchain was divided into two categories:
- Public blockchain networks are information to be viewed by anyone. This can be difficult to deal with since public access can become vulnerable to malicious hacks.
- Private blockchain networks allow only a few authorized figures to gain access to data within a specific block. Private access can affect the decentralized nature of crypto coins because it’s hidden from public view, making it hard to verify.
To meet the needs of everyone involved, experts propose a hybrid blockchain that allows users to organize data within a block into separate categories. This, in turn, can then be viewed by the public whereas some may be kept in private.
2. The evolution of tokenization to include financial assets
Altcoins serve as an alternative to Bitcoin. Many of which contain features that more or less use similar blockchain technology although there may be a few more features added in. In 2019, the use of app coins or application coins will be introduced to the market which works the same way as altcoins, which means that they hold internal value on the platform but can also be swapped for different currencies if needed. This makes is easier for certain industries to enter into the financial market such as the real estate industry.
Tokens work by allowing investors to own shares or stocks of certain property in a safer and more transparent manner which could potentially open a new trading system for assets such as:
- Real estate deeds
- Entertainment assets like music rights
Tokenization is currently being studied for the purpose of regulation. Foreign exchange and cryptocurrency trading platforms are slowly making studies and changes in their system to adapt tokens as soon as regulations and laws permit such trades. This token development in blockchain is said to be the most crucial part of 2019 as financial technology companies are sending appeals to their respective governments to look into tokens as a more efficient way to trade.
3. Advancing regulations involving blockchain technology
Thus far, there have been little to no regulations involving the use of blockchain technology but there have been companies using the technology in order to generate funding for their projects. One of these methods is in the form of ICO or Initial Coin Offering, the financial technology equivalent of an IPO or Initial Public Offering.
ICOs are financial assets that private companies offer to investors as a means to raise funds for a specific project. Instead of offering stocks, shares, and other financial assets, crypto coins generated by private companies will work as potential investments instead. Unfortunately, due to the lack of regulations, many third-party hackers were able to take advantage of ill-informed investors which resulted to thousands of investors to lose their hard-earned capital.
The reputation of ICOs or Initial Coin Offerings have been dipping slowly since it became notorious with fraudulent activities from false companies. To address these problems, certain measures have been made by various financial institutions. One of which is the introduction of STOs or Security Token Offerings. These financial tools are similar to ICOs in a sense where they also work as fundraisers.
However, unlike ICOs, STOs are backed up with company assets like shares, stocks, and bonds. To ensure that they are not abused, certain bodies like the United States Security and Exchange Commission or SEC has approved their existence by making regulatory requirements. This makes it a lot safer for investors to deal with.
4. The introduction of Ricardian contracts
Aside from cryptocurrency, blockchain can also be used in different transactions such as contracts and agreements. When dealing with various apps in 2019, certain companies may introduce the need for Ricardian contract. This is a human-readable legal agreement that more or less functions as an actual contract, which means that both parties agree upon a set of terms and have signed it respectively. The terms are then converted into a machine-readable contract that binds both parties to their respective terms. If one party does not fulfill their obligations, the other may take them to court as Ricardian contracts are safer and less prone to tampering unlike smart contracts, the blockchain technology contracting developed by Ethereum often used in ICOs.
With various financial institutions slowly embracing blockchain technology, it’s only a matter of time before other industries follow suit. With so many changes on the horizon, specifically with securities regarding crypto coins, it’s safe to say that 2019 will be the year of game changers and exciting projects worth investing.