Will blockchain technology prove to be a disruptor in the secure fund transfer industry
The blockchain has become something of a buzzword in the tech sphere. It pops up here there and everywhere, claiming to have fixed things or to bring change to various industries, such is the way with technological disruptors. This article will examine whether or not blockchain technology can affect the field of secure fund transfers. We will touch on why secure fund transfers are important, what the blockchain is, how the blockchain seeks to disrupt the market of secure fund transfer technology, the challenges and limitations that blockchain faces in this sphere and the regulatory struggles that accompany all of this.
Why are secure fund transfers important?
Secure fund transfers are necessary to make sure that financial transactions made by individuals and businesses are confidential and remain free of fraud, theft or other tampering. Typically fund transfers are made through banks or other intermediary third-party groups, which can introduce inherent vulnerabilities as money and information change hands, which is why it is so important that the transfers are secured with the best technology available. Many fund transfer services, like the one you can find if you click here, put great emphasis on the security of their service and work hard to make sure that they have a reputation unblemished by security issues, in some cases that means embracing new technology, such as the blockchain.
Understanding the basics of blockchain technology
We’re sure that by now most of you are probably well aware of at least the vague shape of what blockchain technology is, but we will briefly touch on it just on the off chance that anyone is out of the loop or needs a refresher. The blockchain is a decentralised and distributed ledger technology, which in a nutshell, can hold a great deal of information without the need for a central point controlling it. Each section of the technology, known as a block, contains a list of transactions that can be verified and added to the rest of the blockchain.
How can blockchain technology improve secure fund transfers?
The main way in which blockchain technology can improve the sphere of secure fund transfers is by sharing its immutable nature with it. What this means is that when a transaction is recorded on any part of the blockchain, it cannot be altered or deleted. This means that fraud and theft become very difficult and the integrity of all transactions is very high.
The blockchain also allows all participants to view transactions that are taking place, meaning that intermediaries no longer need to be vetted for trustworthiness, as all transactions are visible and all actions are therefore accountable.
Blockchain transfers are also much faster than traditional fund transfer methods, with faster processing times. This is not considered as important as the previous two improvements, however.
What limitations and challenges does blockchain face in the secure fund transfer industry?
The biggest challenge that blockchain technology faces when attempting to impact the secure fund transfer industry is by far its scalability. Current blockchain technology is not quite able to keep up with the high volume of transactions that typically occur in the secure fund industry.
The next biggest challenge that blockchain faces in this industry is regulatory-based. As far as regulation goes, blockchain is still largely the wild west, which is to say that it is, at best, poorly regulated. This is less of a problem for blockchain to solve, but rather one that it must weather. Governments and regulatory bodies will establish guidelines and pass laws that will affect the way that blockchain technology is allowed to be used, and blockchain must bend to their whims or be ruled illegal in those areas. The main issues likely to drive the hands of regulators are privacy, money laundering and data protection.
To conclude, while blockchain technology is indeed acting as a disruptor in the secure fund transfer industry, it faces challenges that will slow the speed of its disruption.