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Blockchain Technology Behind the Rise of Cryptocurrency
The use of blockchain with applications for digital financial assets is currently its most well-known application

By
Apac CIOOutlook | Monday, January 02, 2023
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The emergence of blockchain technology as a tool to transfer data and value between parties could prove transformative for industries on a global basis, including financial services.
FREMONT, CA: The use of blockchain with applications for digital financial assets is currently its most well-known application (cryptocurrencies such as Bitcoin and Ethereum). However, the OECD and others have emphasised that blockchain technology has a wide range of possible applications since it can reduce the need for intermediaries in data transfers and enhance their cost and security.
Blockchain functions as a network of parties' shared ledger of transactions. Without a centralised authority, the network stores and records every transaction between the parties, and each party has access to the same records. The OECD regards blockchain as having a significant future in the global economy due to its fundamental properties.
The manner in that blockchains function can vary, from completely open and public networks that allow everyone to contribute and add data to the ledger to closed blockchains that are only accessible to a small number of people who have been granted permission to participate. Examples of open networks include well-known, widely-used examples like Bitcoin, whereas a private blockchain might be many banks using a shared ledger. Each node in a blockchain's network is responsible for maintaining and holding the database. One of the main advantages of blockchain is its immutability, which makes it almost impervious to hacker attacks.
A transaction that has been added to the ledger is often irreversible. In a conventional database, a user with access to the centralised server might alter data covertly. The peer-to-peer digital currencies that are now the most well-known blockchain applications effectively allow users to transfer value between one another without the assistance of banks.
When working with clients interested in investing in that space, financial advisers face difficult challenges due to the new and developing nature of cryptocurrencies. According to the Natixis Investment Managers Pro Fund Selector Survey, 40 per cent of fund selectors report that clients are demanding more cryptocurrency solutions, and 45 per cent feel pressure to add cryptocurrencies specifically to appeal to younger investors. 68 per cent of respondents disagree that individual investors should be exposed to cryptocurrencies, and 70 per cent feel their companies need more training before making investments in digital assets and cryptocurrencies.