Bitcoin use the blockchain to have open distributed ledgers for its transactions. However, as I see it, the FinTech market has an entirely different set of opportunities for blockchain technology. Many people are proposing blockchain as a solution to remove the need for third party for settlement of any deals in trading. While this is definitely a novel idea, I am not sure about the risk of counter party default. If it were to work perfectly and reduce the counter party default, all the work the third party does still needs to happen in the system. This is not the problem I am trying to solve.
The problem in FinTech is AUDIT TRAIL. I have seen many FinTech solutions without proper audit trail in place. My idea is to use blockchain technology to create a chain of immutable transactions. Such a chain of transactions will, by default, creates an audit trail. This also solves the problem of tracing a transaction on its life cycle. For example, a trading system will have a chain of transactions that, once created, cannot be changed. Second, it will be apparent where a transaction currently is in its life cycle.
Besides the benefit of chained immutable transactions and transparency into the trade life cycle, the biggest benefits are comparatively cost efficient solutions coupled with a lower cost of ownership overtime. This is because of my proposed plan to use big data technologies that have lower costs and operations with highly fault tolerant.
This technology allows you to open a system outside LAN or WAN as transactions are stamped with encrypted authorization and data.
Because it is an immutable, auditable electronic record, blockchain ensures that transaction records contain artifacts and identifiers of previous transactions. “This allows authorized investigators to backtrack transactions on the blockchain more easily than with current AML and EFM systems,” Forrester said.