How Can Blockchain Help Fight Financial Crises?

The global financial crises in 2008 possibly happened because of the lack of transparency and superfluous trust in banks. These factors can also be the main ones for the future financial collapse. This is why the blockchain technology and its distributed ledger system looks like a solution we really can’t afford to ignore.

Once assets are recorded in a transparent database, many corrupt practices will become basically impossible. Maintaining financial security if you have a transparent capital flow is one very important sector in which blockchain technology plays a major role and working hard to avoid financial disaster. According to analysts, central banks won’t need to go to individual banks in order to check on their operations. They will have access to a shared record of transactions and this way they can monitor the cash flow in real time. This way, regulators will have a better picture of how the liquidity is going and follow the capacity to track a firm’s behavior. Authorities won’t need to bet on the health of a certain financial system. They will have a macro view of capital flow.

The blockchain technology also has great potential to prevent areas where financial disasters can happen quickly. Some areas are those of loan frauds and bad debt proliferation. When a borrower for a loan, stores his ID in a decentralized database, loan fraud will be impossible to be done a thus it will slowly vanish. But the real question is, how farfetched this vision for a better financial sector and the world really is and can it really play out in the future?