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How will Blockchain Revolutionise the Financial Market?

How will Blockchain Revolutionise the Financial Market?

With technology taking over the various sectors in the world, financial markets too have accustomed themselves with this change allowing investors to complete their transactions online. The introduction of the blockchain in private equity markets has further revolutionised the financial market and changed the way people look at it in recent times.


But first, let us understand what exactly is blockchain.

Blockchain system is a database where bits of information or blocks are linked with each other in a chain, creating a system of data that cannot be altered or changed. This makes it impossible for the data to be hacked by anyone. In case a person needs to make changes in the information entered, a new ledger is created and information is stored which helps in keeping the information safe and untouched. As the database is shared and managed by more than one party, inconsistencies are spotted with ease, making it a trustworthy and reliable system.


What change will it bring in the financial market?

The much-hyped bitcoin ecosystem is supported with blockchain technology that has investors keeping their faith in its safety. Here’s a few principles that the technology follows and how it would bring a change in the financial market.


●      Decentralised Ledger

The blockchain system is a digital ledger where every transaction is updated at the same time across all nodes creating a new block. This allows people to find the same information across the distribution chain. With the introduction of blockchain in debt capital markets, the investors find identical information across the different investing channels. There are constant fluctuations present in the financial markets. However, with the blockchain system, it is now easier for investors to find identical prices in different places at the same time.


●      Consensus Validation

There are numerous transactions that take place in the financial markets in a single day. Investors at times tend to enter the wrong transaction details while carrying out a transaction which could lead to facing huge losses. However, with blockchain in private equity, the transactions need to undergo a validation process before it is completed. This does not allow the transaction to go through if the details are incorrect or not entered properly. Due to this, investors have placed their trust in the system even during the absence of a central authority.


●      Immutable and Tamper-proof

The transactions that are entered in the blockchain system are immutable and irreversible making it impossible for anyone to tamper with the data recorded in its system without leaving evidence. This makes the entire process safer and more reliable for the investors and encourages investors to enter the financial markets.


●      User Authentication with Cryptographic Security


●      Smart Contracts

The blockchain in private equity is programmed through smart contracts that encode all the regulatory rules that need to be enforced for a transaction to take place. The transactions are only triggered if all the necessary conditions are met ensuring a smoother flow for an investor dealing in the financial market.


There are many blockchain companies in Singapore that function on the system to carry out their day-to-day transactions to eliminate the inefficiencies and delay in sharing the transaction details across participating agencies. The blockchain system is truly on its way to revolutionise the financial market, if not already, for the betterment of everyone.


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