Blockchain Opens The Door For A Cashless Society

Blockchain Opens The Door For A Cashless Society

Fintech seems to be the new disruptive technology that is likely to impact on everyone’s lives as paying for goods and services moves to cashless transactions.

Financial regulators and governments around the world are concerned that developments in the sector are likely to undermine the banking system, so have decided to look at the risk and whether concerted action is needed to protect traditional banking.

At the root of the worries is a new technology – the blockchain.

A blockchain is basically a database of digital transactions that only verified users can update, and once added to the blockchain, information cannot be deleted.

Blockchain was invented as a security system to keep track of online financial transactions for the virtual currency Bitcoin.

Fintech tipping point

At one time, central bankers and governments feared Bitcoin and other virtual currencies that are outside their control may have become a financial force to be reckoned with.

But the banks have grasped the nettle and assimilated blockchain technology into their own services and stolen the mainstream initiative away from virtual currencies.

Banks are investing big time in fintech. The sector attracted £1 billion investment in 2010, which has surged to £13.36 billion in five years.

The money is going into developing online payments systems built around blockchain.

Analysts in the US say fintech companies and banks are slugging out the fight for customers in China – and fintech have the edge with more customers.

The same tipping point, they say, is approaching in the US and Europe.

The rise of blockchain

Central bankers find the thought of unregulated banking frightening, so have sat down around a table in Tokyo under the auspices of the Financial Stability Board and what to do about the rise of blockchain was high on the agenda.

Bank of England governor Mark Carney chairs the board.

After the meeting, Carney explained that central banks and governments see no immediate concerns to the banking system.

“We agreed that what needs to happen to move with fintech developments in a way that is open to innovation and improves the banking system,” he said.

“It’s likely other decisions will have to be made about consumer and data protection before we consider how blockchain will affect the financial stability of banks.”

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