Privacy and blockchain go hand in hand. There has been a massive debate on Blockchain privacy or the lack of it and also how it safeguards privacy. Many have flagged predominant Blockchain privacy issues including the vulnerability toward transactional data leaks.
Why was this a concern?
This is because public keys of all networks are ever-visible. Security breaches have also been reported in the recent past, related to smart contracts and Ethereum.
When it comes to blockchain security, there is a concept of public and private keys. Blockchain based systems make use of something called asymmetric cryptography for securing transactions taking place between the users. Every user has his or her own private or public key in the system which is a number string without any relation.
The question now is, in spite of these pressing aspects, why is Fintech still biting the bait? What lies behind its all-out desire to embrace blockchain for greater consumer safety and privacy? Let’s find out!
The fintech space is no stranger to this technology which is already the hottest moot point within the Government, industry, start-up and media spaces. And why not? Blockchain enables secure data recording, making it almost-impossible to break into the system or modify it in any manner.
The bonhomie between blockchain and fintech makes more sense when you perceive the former as a digital ledger with its own blocks or records. These are deployed for asset tracking and transaction recording within the network.
This makes operations more democratic, providing higher security and transparency in a more optimal model for the sector, while decentralizing privacy in a way of speaking. Transactions are noted in real-time while there is a reliable transaction record, taking away the issue of modifying earlier ones.
What it means is that blockchain technology can virtually make all future transactions completely bullet-proof in terms of privacy and reliability. No wonder it is becoming the new poster boy for fintech companies of varying sizes.
The trends have not gone unnoticed amongst the Mandarins in power. The Government has established its own Centre for Excellence in Blockchain Technology, as part of the Union Ministry of Electronics and Information Technology.
In essence, the Government is already making use of this technology for its Digidhan platform that enables accurate reporting, monitoring and analysis of all types of digital payments transactions in the country. Talk about Blockchain going mainstream and the proof lies in the pudding.
The Government has already shown the way forward, embracing innovation and Blockchain hand in hand. In fact, moving forward, Blockchain could well generate millions of worldwide jobs while adding significantly to global economies in the next decade.
Fintech players are finding greater value in aligning with this technology for ensuring the absolute privacy and safety of each individual transaction. Blockchain is mostly being used for digital identity, transferring funds and setting up proper infrastructure for digital payments. These are already flagship offerings for several BFSI start-ups, fintech entities and even conventional banking players in the digital space.
India is already home to 500+ blockchains throughout the financial services spectrum as per estimates. In fact, with Web 3.0 set to make a bigger splash in the coming years, blockchain (which Web 3.0 will depend upon), will assume a more significant role.
It will make the banking system near-indestructible for anybody to break in or pilferage information. It will also centralize this entire network simultaneously, while lowering fraud risks for financial transactions and ensuring a higher level of consumer security.
Blockchain is what will contribute towards a transparent, reliable and easily accessible system of peer-to-peer or digital lending which will be more customized across banks or fintech companies. Blockchain technology is also not stagnant; it will continue on its path toward evolution, offering newer fintech upgrades periodically.
The Indian Government is already doing its bit for promoting start-ups and financial inclusion. With the Government connecting the dots between privacy and blockchain, private players will not be too far behind. Blockchain technology will be prioritized for creating these transparent, reliable and bullet-proof fintech and lending ecosystems of the future.
And of course, new-age fintech start-ups and associated companies will drive this trend without a doubt. Blockchain technology is currently a beacon of hope for the fintech space in terms of higher consumer safety and privacy. However, more needs to be done to ensure its rapid adoption.
Blockchain based transactions enable users to fully control their own information via public and private keys. They can own their data and privacy in a decentralized manner. There are no third-parties or intermediaries who can get this data and potentially misuse it. Personal information stored on blockchains are accessible and controllable by owners. They will have full control over the access of their data by third parties.