All banks put their own interests first. As long as banks have more control over the commercial activities of population, it’s less likely that there will be a decentralized economy in the world some day.
Historically, the public and economic powers have exercised a powerful influence over the world. So much so that banks have become the trigger of hundreds of international conflicts. During years, powerful people have used their influence over banks to exert economic pressure on individuals, corporations and even entire countries. Many times, bank accounts of many people have been frozen due to unjustified reasons. It’s true that these measures are necessary to keep control in the world. However, it’s also true that the main losers with these decisions are ordinary citizens.
The implementation of blockchain technologies can help to keep the current banking system shielded from the influence of public institutions. The current economic crisis in many countries of the world is due to bad decisions made by banks and public power. Many banks invest their clients’ capital without their permission, and when investments don’t go well, hundreds of thousands of people lose all their money in a matter of seconds. In other cases, when banks are intervened by regulatory institutions, all customer accounts are frozen until the investigation ends.
With blockchain systems, it’s impossible for third parties to have access to other people’s funds. The blockchain technology is based on cryptographic codes that are almost impossible to decipher by a hacker or software. Also, the implementation of blockchain will reduce the high costs associated with informationprocessing.
Current banking transactions are subject to rigorous auditing processes that require time and money. With blockchain technology, the process of finding and identifying information is much simpler, since in each transaction, each of the ledgers has the same synchronized information. In short, there are several sources that can be consulted to find the same information.
In a common banking transaction, there’s a single issuer of electronic funds. However, transactions with cryptocurrencies are very different. In these cases, the funds come from different directions, from different issuers. This makes it difficult for full funds to be withdrawn in case of cyber attack. If a hacker wanted to steal all the money from a transaction, he would have to hack all the issuers involved, which is almost impossible.
In case of a possible implementation of the blockchain technology in the current banking system, it would be necessary the control from public institutions over the generation and administration of wallets, which contain the personal information of each user. In a blockchain, that’s the only sensitive information that could be vulnerable without proper control.
As we can see, implementing blockchain technologies in the banking system would bring many benefits. However, to achieve this, the support of public and international regulatory institutions is necessary. If that never happens, a free world economy will never be possible.
However, educating the world on how to implement these technologies in daily life would be an excellent start.
Kamran Gasimov is an adviser to the Chairman of the Board and Director of Creation of Bank Products and Development of Sales Channels at MuganBank OJSC. He also is a Co-Founder and Development Director of Accounting and Tax Resources and the Founder and Director of Richmond Group.