【Metaverse News】Why is the financial industry keen on blockchain technology?

Why has the financial industry become the industry most affected by blockchain? What are the similarities between blockchain and the development of the financial industry? In the current complex application scenarios of "blockchain+finance", how should we systematically understand the development of blockchain finance, and what are the industry application cases that have already been put into practice?

In order to understand the latest developments in the blockchain+finance industry, Silicon Valley Insight has collaborated with multiple domestic and foreign blockchain enterprises to conduct various forms of research and interviews, obtaining insights from frontline industry practitioners on blockchain technology and the development of the finance industry. The report will focus on the latest application scenarios of blockchain finance, clarify the development ideas of blockchain+finance, and analyze the current development status of blockchain+finance.

Some people say that if the real economy is like a big tree, then the financial industry is like a big river. Economy is the body, finance is the bloodline, and the two coexist and prosper. With the continuous development of China's economy in recent years, the scale of the financial industry is also rapidly expanding, and the Chinese financial system is constantly evolving towards marketization, diversification, and internationalization.

In the process of development, the financial industry has gradually presented several significant problems. One is the high trust barriers between institutions and markets. Due to technological means to ensure the safety of transactions between both parties, financial institutions must have strict transaction records to accumulate credit. Currently, the credit intermediary function in the financial industry is provided by a centralized third-party, but the fragility of the centralized structure will continue to expand with the scale of the system. However, enterprises must rely on this system, otherwise it is difficult to achieve financing or loans; The second is that the transaction settlement process is complex and costly. Due to the current focus on centralized clearing institutions, transaction settlement and clearing times may be relatively long, and real-time cannot be guaranteed, resulting in a large amount of intermediary fees; Thirdly, there are significant risks to financial regulation and information security. In traditional finance, there are many human involvement processes, and many voucher reviews and transfers rely on manual recording and control, resulting in a high risk of information errors or leaks.

To sum up, the traditional financial industry mainly faces pain points such as trust issues, cost issues, and data security issues. So, what can the emergence of blockchain technology solve?

We know that blockchain technology has several significant features: decentralization, data immutability, and encryption protection for private data, which are highly in line with the essential needs of the financial industry.

Firstly, blockchain technology establishes a credit foundation for both parties in financial transactions through asymmetric encryption algorithms, promoting consensus. Both parties do not need to rely on third-party guarantees, but can also record, store, and transmit traceable and difficult to tamper with transaction information, solving trust problems. Secondly, blockchain technology uses peer-to-peer trading methods and does not require third-party intermediaries to provide services, which greatly improves financial transaction efficiency and solves cost problems.

In addition, blockchain technology utilizes distributed systems to make all information feel like independent nodes, and even if a single node experiences missing information, it will not affect the normal operation of the entire system. At the same time, certain permission management can be carried out between various nodes, and personal privacy and anonymity can be applied to the design of user information systems. Only through authorization can login and access relevant information be carried out, solving regulatory and security issues.

It can be said that blockchain technology can fundamentally reduce the risk control and regulatory costs of the financial industry, improve data reliability, stability, and security, and contribute an indispensable force to the improvement of efficiency in the financial industry.