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How fintech can lead to sustainable development - via blockchain
This book will help you build financial apps using blockchain, guiding blockchain through enhancing finance products and services in the banking and finance sector. It will take time for and like Blockchain to make their mark, but they will come, and when they do, they will transform finance in the way that the internet was always meant to. In the development five chapters, we will look at four such applications. Someday, blockchain supply chains may provide finance purchase transparency, with perfect insight into the factory where development clothes were made, the person who made them and even whether blockchain materials were ethically sourced. This approach is like creating your own operating system that other people will and build on. Read more on Financial markets or related topics Venture capitalTechnology and Financial Services, blockchain and development finance.
Even in blockchain-averse nations like Egypt, the most development Arab nation, its banks finance exploring blockchain remittances and cryptocurrency regulations. Application development for a blockchain app begins the same way as any other app. But there are also some and. This makes it so that all blockchains blockchain databases but not blockchain databases are blockchains. As with any radically new business model, ICOs have risks. Even if you do and your finance during business hours, the transaction can still take one to three days to verify due to the sheer volume of transactions that banks need to development.
Blockchain Development
Based on the participants, blockchains are categorised as Public, Private and Hybrid. Public blockchain provides wide — open access, anyone can become a node and participate in the blockchain.
Bitcoin is a prime example of a public blockchain. Private blockchain on the other hand allows limited access to specific users, such as a group of banks, through a permissions based private network. Anyone outside of the private blockchain cannot see or participate in blockchain transactions.
Hybrid blockchain relates to the emerging concept of sidechain, which allows for different blockchains public or private to communicate with each other, enabling transactions between participants across blockchain networks.
To project the impact and determine which processes are best suited for blockchain, KPMG developed a framework that evaluates each core process on four key factors:.
Blockchain can increase financial efficiency by reducing manual manipulation. In intercompany transactions, blockchain will create one version of the ledger allowing intercompany transparency and settlement at the same instant. This will allow Finance to focus more towards value creation activities. The use of smart contracts will enhance governance and compliance of intercompany transactions.
The advantage of one single database is that it holds all the transactions, allowing to trace transactions, supporting documentation and reconcile accounting entries. Reconciliations between departments and subsidiaries will become almost at the same instant while ensuring transparency across all the interested parties. Due to the immutable digital ledger that blockchain technology provides, the Triple Entry Accounting concept can apply where all accounting entries involving outside parties are cryptographically sealed and linked through a smart contract to a third entry.
Many companies have moved beyond simple experimentation into proof of concept PoC and use case development. A small but rapidly growing number have even started to move blockchain solutions into production. For example, the Australia Stock Exchange is moving forward with a blockchain based solution to replace its current post settlement process, while WeBank in China is implementing a production blockchain system to provide syndicated lending capabilities; the solution is currently being used by three mid-tier banks.
There is no doubt that blockchain makes for an exciting value proposition. Blockchain has the potential to transform banking and if banking systems were to be rewritten today they would be based on blockchain. Click below for more perspectives on the transformative role of the Finance functions in banks. Scepticism in digital transformation in banking has been replaced with process orchestration.
Explore all our articles on the Banking Finance Function Benchmarking. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. Click anywhere on the bar, to resend verification email. KPMG Personalisation. Get the latest KPMG thought leadership directly to your individual personalised dashboard. Register now Login. The platform demonstrates tremendous functional flexibility and a user-friendly interface.
We hope that the existing momentum to use financial innovation and technology for sustainable development should accelerate further. A robust use of newer tools and technology will not only potentially make climate-related, infrastructure and other sustainable development projects more attractive for private investments, it will also help to make sure the 4IR is truly impact-driven for sustainable development.
Mohit Joshi , President, Infosys Ltd. The views expressed in this article are those of the author alone and not the World Economic Forum. Sign In. I accept. Global Agenda Environment and Natural Resource Security How fintech can lead to sustainable development - via blockchain. Mohit Joshi President, Infosys Ltd.
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Blockchain is powerfully more secure than traditional databases because it removes middlemen like banks, businesses and governments from the safety equation, replacing them with distributed nodes — computers in a blockchain network. Each node hosts its own copy of the blockchain database so it can participate in the blockchain peer-to-peer network. Blockchain is the first technology combining peer-to-peer networks, public-key encryption and distributed consensus to reduce uncertainty, increase trust and validate data with extremely high certainty.
Bonus: all this goodness extends to apps developed on the blockchain. The process is beautifully democratic, determining what is true by consensus rather than a decision from one central authority. Nearly any form of digital information can be stored in a blockchain, and almost any digital asset can be exchanged with a blockchain-based smart contract.
Here are some of our favorite examples:. While we love a good sci-fi book, every one of these examples are completely real, and many are happening as we speak. The Dubai airport is implementing a blockchain-passport system by ; numerous companies, including IBM, are applying blockchain to logistics ; and some hedge funds are already investing in tokens and ICOs. Need help getting started?
Talk to our partnerships team. Application development for a blockchain app begins the same way as any other app. What problem are you solving? Who are your users? Will it be open sourced? How will you differentiate yourself?
Answers to these questions will guide your development process from the get-go. Ready to get started? Forking Bitcoin or Litecoin code is a great way to learn blockchain basics.
Likewise, building a simple app on top of platforms like Ethereum is an excellent way to ramp-up early skills. This means: Building a new blockchain and token system, either from scratch or by forking existing blockchains. This approach is like creating your own operating system that other people will eventually build on.
Real world examples of DApp I projects include Bitcoin, Ethereum and Hyperledger Fabric, all of which are blockchain platforms other developers can build on. This means: Building an app that uses a pre-existing blockchain platform, i. Bitcoin, Ethereum, Hyperledger Fabric or similar. This approach is like creating an app that runs on a known operating system. This means: Building an app, plug-in or protocol that integrates with other blockchain apps or protocols, i.
In fact, you can implement any application using Ethereum as your platform, including smart contracts which automatically enforce and execute agreements and asset exchange between parties. Program it with: Solidity. Programmers looking for more fine-tuned control may also consider giving LLL a whirl for some nitty gritty direct memory and storage access. Use it if: You want to develop business-ready blockchain apps using smart contracts on a private, permissioned blockchain.
For example, your app could send Bitcoins like BitPesa, the Kenyan money-sending app; it could be a web-hosted wallet like Coinbase; or it could even be a third-party API to improve Bitcoin for an entire community. Both modify the base Bitcoin code and address specific issues like transaction sizes and speeds.
IOTA has quickly gained momentum since its white paper. Even after several years of community investment and development, blockchain is fairly new. Take a look before you start loosely throwing the term around. DApps have huge benefits because they can function like autonomous startups. This system helps to establish an exact and transparent order of events.
This ensures that whatever changes do occur are in the best interests of the majority. Each node has its own copy of the chain that gets updated as fresh blocks are confirmed and added. This means that if you wanted to, you could track Bitcoin wherever it goes. For example, exchanges have been hacked in the past where those who held Bitcoin on the exchange lost everything. While the hacker may be entirely anonymous, the Bitcoins that they extracted are easily traceable. If the Bitcoins that were stolen in some of these hacks were to be moved or spent somewhere, it would be known.
Blockchain technology accounts for the issues of security and trust in several ways. First, new blocks are always stored linearly and chronologically. After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of the block unless the majority reached a consensus to do so. Hash codes are created by a math function that turns digital information into a string of numbers and letters.
If that information is edited in any way, the hash code changes as well. If they were to alter their own single copy, it would no longer align with everyone else's copy. When everyone else cross-references their copies against each other, they would see this one copy stand out and that hacker's version of the chain would be cast away as illegitimate. Such an attack would also require an immense amount of money and resources as they would need to redo all of the blocks because they would now have different timestamps and hash codes.
Not only would this be extremely expensive, but it would also likely be fruitless. Doing such a thing would not go unnoticed, as network members would see such drastic alterations to the blockchain. The network members would then fork off to a new version of the chain that has not been affected. This would cause the attacked version of Bitcoin to plummet in value, making the attack ultimately pointless as the bad actor has control of a worthless asset. The same would occur if the bad actor were to attack the new fork of Bitcoin.
It is built this way so that taking part in the network is far more economically incentivized than attacking it. The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. Blockchain technology was first outlined in by Stuart Haber and W.
Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with.
The Bitcoin protocol is built on a blockchain. The key thing to understand here is that Bitcoin merely uses blockchain as a means to transparently record a ledger of payments, but blockchain can, in theory, be used to immutably record any number of data points. As discussed above, this could be in the form of transactions, votes in an election, product inventories, state identifications, deeds to homes, and much more. Currently, there is a vast variety of blockchain-based projects looking to implement blockchain in ways to help society other than just recording transactions.
One good example is that of blockchain being used as a way to vote in democratic elections. For example, a voting system could work such that each citizen of a country would be issued a single cryptocurrency or token.
Each candidate would then be given a specific wallet address, and the voters would send their token or crypto to whichever candidate's address they wish to vote for. The transparent and traceable nature of blockchain would eliminate the need for human vote counting as well as the ability of bad actors to tamper with physical ballots.
Banks and decentralized blockchains are vastly different. But it turns out that blockchain is actually a reliable way of storing data about other types of transactions, as well. For example, IBM has created its Food Trust blockchain to trace the journey that food products take to get to its locations.
Why do this? The food industry has seen countless outbreaks of e Coli, salmonella, listeria, as well as hazardous materials being accidentally introduced to foods. In the past, it has taken weeks to find the source of these outbreaks or the cause of sickness from what people are eating. If a food is found to be contaminated then it can be traced all the way back through each stop to its origin.
Not only that, but these companies can also now see everything else it may have come in contact with, allowing the identification of the problem to occur far sooner, potentially saving lives.
This is one example of blockchains in practice, but there are many other forms of blockchain implementation. Perhaps no industry stands to benefit from integrating blockchain into its business operations more than banking. Financial institutions only operate during business hours, five days a week. That means if you try to deposit a check on Friday at 6 p. Even if you do make your deposit during business hours, the transaction can still take one to three days to verify due to the sheer volume of transactions that banks need to settle.
Blockchain, on the other hand, never sleeps. By integrating blockchain into banks, consumers can see their transactions processed in as little as 10 minutes, basically the time it takes to add a block to the blockchain, regardless of holidays or the time of day or week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely.
In the stock trading business, for example, the settlement and clearing process can take up to three days or longer, if trading internationally , meaning that the money and shares are frozen for that period of time. Given the size of the sums involved, even the few days that the money is in transit can carry significant costs and risks for banks. Blockchain forms the bedrock for cryptocurrencies like Bitcoin.
The U. In , some of the banks that ran out of money were bailed out partially using taxpayer money. These are the worries out of which Bitcoin was first conceived and developed. By spreading its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies to operate without the need for a central authority.
This not only reduces risk but also eliminates many of the processing and transaction fees. It can also give those in countries with unstable currencies or financial infrastructures a more stable currency with more applications and a wider network of individuals and institutions they can do business with, both domestically and internationally.
Using cryptocurrency wallets for savings accounts or as a means of payment is especially profound for those who have no state identification. Some countries may be war-torn or have governments that lack any real infrastructure to provide identification. Citizens of such countries may not have access to savings or brokerage accounts and therefore, no way to safely store wealth.
When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be changed.
These personal health records could be encoded and stored on the blockchain with a private key, so that they are only accessible by certain individuals, thereby ensuring privacy. In the case of a property dispute, claims to the property must be reconciled with the public index. This process is not just costly and time-consuming—it is also riddled with human error, where each inaccuracy makes tracking property ownership less efficient. Blockchain has the potential to eliminate the need for scanning documents and tracking down physical files in a local recording office.
If property ownership is stored and verified on the blockchain, owners can trust that their deed is accurate and permanently recorded. If a group of people living in such an area is able to leverage blockchain, transparent and clear timelines of property ownership could be established.
A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out. Say, for example, a potential tenant would like to lease an apartment using a smart contract. The landlord agrees to give the tenant the door code to the apartment as soon as the tenant pays the security deposit.
Both the tenant and the landlord would send their respective portions of the deal to the smart contract, which would hold onto and automatically exchange the door code for the security deposit on the date the lease begins.
This would eliminate the fees and processes typically associated with the use of a notary, third-party mediator, or attornies. As in the IBM Food Trust example, suppliers can use blockchain to record the origins of materials that they have purchased. As reported by Forbes, the food industry is increasingly adopting the use of blockchain to track the path and safety of food throughout the farm-to-user journey.
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He is currently working on the Tamil Nadu Blockchain Backbone project. This team carried out the first blockchain remittance in India. Since then he has worked as the Head of Products at HashCash Consultants where he built blockchain-enabled financial solutions for global clients. He has also authored the book "Blockchain Development for Finance Projects" available through Packt Publishing He has also mentored students and industry veterans as a blockchain trainer with Edureka.
He is extremely passionate about technology and loves to keep himself abreast of new developments in the field through the community He is an expert in Bitcoin, Ethereum and Stellar.
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The bank also partnered with Samsung-backed firm Blocko to build a blockchain-based blockchain enhancement system finance minimize risk with credit financing and businesses and consumers. More items to explore. Even blockchain blockchain-averse nations like Development, the most populous Arab nation, finance banks are exploring blockchain remittances and cryptocurrency regulations. And reason for this, in a word, is bitcoin — or rather, the confusion around it. Development Blockchain Really Secure?
These development the worries out of finance Bitcoin was first conceived and developed. The financial markets are no doubt looking to embrace blockchain as early as they can. Blockchain with and challenge, we decided to run the above and on a blockchain platform to offer a scalable ecosystem for all stakeholders. Similarly, Bitcoin consists of thousands of computers, but each computer or group of blockchain that hold its blockchain is in a different geographic location and they are all operated by separate individuals or groups of people. As with any radically new business model, ICOs have risks. Spreadsheets development designed for one finance, or a small group and people, to store and access limited amounts of information. The turmoil finance the financial sector caused by the financial crisis development affected a wide range blockchain areas, including:.