Blockchain: the Solution to the Financial World’s Security Problems

August 10, 2017

1:30 pm

The discussion about digital currency is admittedly a strained one. While advocates have explained the benefits in depth on more than one occasion, everyday consumers are having a hard time getting on board when it’s primary function is facilitating ransomware attacks. However, what most don’t realize is that blockchain provides a unique opportunity for the financial sector to make security a priority. They just have to lean into it.

Recently, I had the chance to interview Sergey Nazarov, the CEO of SmartContract and an expert on blockchain, about the future of digital currency, the benefits we’ll see because of it, and how his own LINK tokens will contribute to the process. Take a look below:

Security Above All

Considering the widespread panic about cyber attacks in recent months, there is a dire need for a little more security in the digital world. The consumer finance industry in particular needs to address the issue, as more and more people are growing worried about the future of their savings. Fortunately, blockchain can solve this problem.

“For consumer use cases it won’t even be known to the end-user that the blockchain is a key part of the infrastructure their now relying on,” said Nazarov. “Consumers will benefit from this with lower levels of fraud, greater security, greater transaction speed, and therefore a large reduction in costs within the developed markets, as well as the ability to leapfrog into various capital markets capabilities in emerging markets.”

Big Blockchain Banks

Digital currency for consumers is one thing. But if the financial sector wants to truly embrace security, they’re going to have to think a bit bigger. And as blockchain becomes more popular and refined, the big banks could use it to guarantee funds are secured.

“The institutional finance world will, however, be completely reinvented by shared blockchain-based ledgers and how they allow information to flow between counter parties, as well as regulators,” said Nazarov. “There are many redundant systems in separate banks that will be replaced, and key inter-bank infrastructure that will need to be reinvented to remain competitive.”

The Future

So what does the not-so-far-off future hold for blockchain? Oh nothing too significant, just a centralized digital currency bank to keep the global economy stable. No big deal.

“There will be a Central Bank Digital Currency in the next 10 years with a stable global economy, and in the next 2-5 years in an unstable global economy,”said Nazarov. “Central Bank Digital Currency is the obvious solution to many regulatory, transparency and even technical issues.”

From Nazarov’s perspective, even the most outlandish predictions are a bit reserved when it comes to what the financial world will look like with blockchain at the helm. Because with this kind of change, anything is possible.

“Smart Contracts and Blockchains were predicted to house 10 percent of global GDP by 2027; that now seems conservative,” said Nazarov. “We believe that over the next 10 years 50 percent of more of global financial contracts in securities, insurance, trade finance and other key financial agreements will transition onto blockchain-based smart contracts. The same thing that happened for social, image, video, ecommerce, and other less critical information is happening once again in what would most aptly be called an ‘internet of contracts.'”

The Smaller Picture

You can’t change the financial systems of the world in a single day. You can, however, take steps in the right direction with your own company, which is exactly what Nazarov is doing with his new LINK tokens designed to assist in the use of smart contracts.

“Our LINK token allows smart contracts to pay for connectivity to key off-chain resources like data feeds, bank payments, and various other capabilities that smart contracts need to do something valuable,” said Nazarov. “Smart contracts can’t access off-chain resources on their own, and their ability to include data as proof/trigger and bank payments as a way to settle financial agreements, are both critical parts of their usefulness.”

Read more about digital currency on TechCo 

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Conor is a writer, comedian and world-renowned sweetheart. As the Senior Writer at Tech.Co, he’s written about everything from Kickstarter campaigns and budding startups to tech titans and innovative technologies. His background in stand-up comedy made him the perfect person to host Startup Night at SXSW and the Funding Q&A at Innovate! and Celebrate, posing questions to notable tech minds from around the world. In his spare time, he thinks about how to properly pronounce the word "colloquially." Conor is the Senior Writer at Tech.Co. You can email him at [email protected].

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