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This is a far cry from numbers of $10 trillion previously projected by Boston Consulting Group.
Heres a look at the role blockchain might play inkey areas of financial planning.
What Is Blockchain Technology?
First, lets back up for a quick review of exactly what blockchain is and how it works.
The ledger tracks transactions and also aims to build a consensus about whether the transaction data is valid.
With blockchain technology, users can confirm transactions without requiring a central clearing authority.
Why Is Blockchain Important?
This transparency helps accelerate the verification process, reduce the need for back-office functions, and promote security.
How Does Blockchain Work?
To secure transactions of bitcoin and other cryptocurrencies, two keys are required a private and a public key.
The public key is shared permanently in the log.
It can be used to sign and encrypt a message.
The private key is only known to users and acts as a pin code.
A recipient uses this key to decrypt a transaction.
Processing transactions on the blockchain requires sophisticated computers that tend to be energy hogs.
If this drawback can be addressed, we will undoubtedly see blockchain play aneven larger rolein financial planning.
Here are a few ways its being used today.
By creating NFTs of artwork, these assets can be easily tradeable.
They can even be duplicated, although this will diminish their ultimate value.
Smart contracts eliminate the need for intermediaries forloan issuance or dividend payments.
Blockchain can facilitate faster loan funding, as well as automatic dividend payments at faster speeds and lower costs.
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