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Blockchain could render banks and lawyers obsolete

(Image credit: Image Credit: Zapp2Photo / Shutterstock)

Blockchains could spell death for central authorities including banks and lawyers, a new report claims.

The report from the ICAEW group says that smart contracts using Blockchain technology could shake the very foundations of financial systems. Being capable of direct interaction, this technology could cut costs for businesses, as well as effort of doing business with a ledger owner. Financial crime and shady business would be harder to pull off, as well.

“Blockchains mean organisations can work together without an intermediary, but no longer need to have institutional trust in one another," said David Lyford-Smith, IT technical manager, ICAEW.

"This is potentially a seismic shift in how we do business. It will have knock-on effects on everything from record keeping to supply chain management and accounting and audit. It could potentially remove middleman institutions, gain transactional certainty, reduce cost and bias and open up access to more participants.”

Blockchain brings a thorough change to the keeping and running financial records. Instead of centralised records with one owner, blockchain works on the principle of all users having identical copies. Any participant can thus track all previous transactions, improving transparency and making the blockchain ‘self-auditing’.

David said: “At the moment, the trustworthiness of a ledger comes from the central controller. By distributing records among users, the trust is instead in the recordkeeping system itself, which means a greater degree of reliability.”

Blockchain can be used in a wide variety of industries, and for different things.

David said: “There are potential applications beyond commerce. This is especially appealing in cases where transparency and accountability are key. For example, if aid spending were provided in a blockchain-based asset, the end receiver of the funding is easily identified. This would help deliver much greater confidence in the process.”

The full report can be seen on this link

Image Credit: Zapp2Photo / Shutterstock