How Blockchain can make a difference in the financial market


Blockchain technology is among the ground-breaking innovations in the financial services industry. It is expected to transform how operations are executed – making the global financial industry more interconnected and efficient.  

Trust in the blockchain-based systems is a product of advanced cryptography, which is difficult to hack; such robust infrastructure helps conduct a secure transaction. The most important role of decentralized ledger technology is to keep track of transactions, ownership, and trades across the globe. 

Benefits of Blockchain in Financial Markets:

Simplicity and Transparency:

Deploying Blockchain in Capital Markets will make market data and metrics more reliable. Blockchain employed by decentralized finance development experts relies on mutualized standards, protocols, and shared operations. It helps ensure the data present over the blockchain network act as a primary and singular shared source of truth for both investors and asset owners.  

Assurance and trust:

The immutability of Blockchain in Capital Markets will help ensure transparency and trust. The digital, open, immutable ledger makes it convenient for investors and asset holders to determine ownership of assets as well as analyse data present over the business network. The digital ledger also helps involved parties collaborate, manage, and establish consensus across the network. Because the ledger is immutable and tamper-proof, frauds and malicious third-party cannot compromise or manipulate the entire blockchain network.   

Reliability and Security:

Blockchain in Capital Markets plays a critical role because it provides more control and power to the people participating in the network. The blockchain infrastructure heavily relies on distributed consensus algorithms to operate appropriately across all the nodes. The applications developed and deployed by the decentralized finance development experts are fail-proof because of the decentralized nature of blockchain. On top of that, the decentralized ledger technology eliminates the dire need for a data intermediary – often referred to as transfer agents, banks, inefficient monopolistic intermediaries, and operators. Scalable:  

The application of blockchain in Capital Markets helps ensure interoperability across both private and public protocols. With the help of a solution designed by the decentralized finance development company, global organizations can explore the cross-border market and ensure institutional resilience with the highest degree of security.  

Programmability:

A programmable smart contract on top of a public, private, or hybrid blockchain in Capital Markets is a game changer. The programmability factor of the smart contracts allows decentralized finance development companies to build tamper-proof, reliable, trustworthy, deterministic decentralized applications that efficiently run over the blockchain network. These digital contracts allow businesses to automate rudimentary financial operations and hard-code critical business logic.  

Performance:

Often, performance becomes an issue with public blockchain. This is the reason why private and hybrid protocols are developed and designed by decentralized finance development experts to support thousands of blockchain transactions per second. The application of blockchain in Capital Markets will not only make the process efficient but will also make handling and management of periodic surges in activity easy. 

Privacy:

Blockchain in Capital Markets helps ensure data privacy at each and every step of the process, including across the software stack employed by decentralized finance development experts for the implementation and deployment of applications. Blockchain in Capital Markets will help restrict sharing of critical data across all the business networks – providing reliable, controlled accessed, reliable data infrastructure. It will help imbue trust, transparency, efficiency, privacy, confidentiality, and maintainability in the underlying financial infrastructure.

Application of Blockchain in Capital Markets and traditional financial systems

Capital Markets and Asset Management: Exchange, Derivative, Issuance, Sales and trading, Clearing and settlement, OTC upgrades, post-trade services, and infrastructure, licensing, Asset servicing, and Custody, Fund launch, cap table management, transfer agency in asset management, and fund administration, asset ownership status, and management processes. 

Banking and Payment: Domestic retail payments, Credit prediction and credit scoring, inter-bank ledgers, domestic wholesale and securities settlement, CBDC, loan syndication, assessment of debt-to-income ratio, cross border payments, international transfer, underwriting, stable coins, tokenized fiat, and cryptocurrency, and disbursement, asset collateralization.  

Trade Finance and Insurance: Letters of credit and bill of lading, Claims processing and disbursement, reinsurance markets, financing structures, and parameterized contracts.

Impact of Blockchain on Capital Markets

The financial instruments and tokenized assets developed by decentralized finance development companies – on top of blockchain protocols, are not only programmable but also tradable as well as manageable. Using Blockchain in Capital Markets helps eliminate the risk posed by the traditional centralized financial system – which acts as a single point of failure. Moreover, smart contracts-based automated systems help streamline complex processes and workflow while reducing operational friction and human error, including counterparty risk.  

The applications built by decentralized finance development teams on top of blockchain protocols can help create and enforce sustainable incentive mechanisms to bring more participants in as well as penalize nefarious activities. The decentralized ledger technology comes up with a built-in privacy features to ensure top-notch security and confidentiality. Smart contracts help automates fund management and administration processes as well as improve the governance aspect of holdings. 

On top of that, it allows businesses to authenticate their user in real-time. Additionally, the system implemented by decentralized finance development experts automates the compliance process as well as regulatory oversight and auditing. 

In the near future, blockchain technology is expected to support real-time gross settlement between central banks, commercial banks, and independent banks, including other government authorities.

About Liminal

Liminal is among the leading enterprises offering institution-grade web3.0 infrastructure, such as a digital asset custodian platform designed to assist organizations with their digital asset self-custody need. Liminal’s digital asset custodian platform services are developed with simplicity in mind because we believe that managing your digital assets should not be intimidating and complex. We have built our digital asset custodian platform services with a security-first approach – so that you can sleep peacefully without worrying about the security of your digital assets and funds. And you also receive expert customer support from our end to resolve challenging technical complications. 


Share This Article