Blockchain technology has provided a lot of great benefits across multiple sectors. However, so far Forex firms have been slow to adopt the technology.
While there can be challenges with implementing blockchain technology, the benefits it can provide within the sector are crucial. Here, we’ll look at what blockchain technology is and how it can impact the forex market.
What is blockchain technology?
Blockchain technology was originally designed with Bitcoin and other digital currencies in mind. It is a type of record-keeping technology, storing data within a public network securely. The blocks are basically digital pieces of information including things such as transaction ID’s, dates and the amount of the transaction. Each one is unique so they can be easily identified.
Every time a block of information is created, it is added onto a chain of other blocks, hence its name “Blockchain”. Each of the blocks are verified by a complex computer network to ensure it is legitimate.
What benefits can it deliver to forex firms?
Forex firms can experience a number of benefits from implementing blockchain technology. These include:
- Decreased costs
- Boosting security
- Speeds up transactions
Companies which have implemented blockchain technology have seen a significant decrease in costs. This is down to several factors, such as the increased speed and efficiency of transactions. Stocks can be purchased and processed much quicker as blockchain technology eliminates the need for a middleman. As customers don’t need to wait to have their transactions processed, it enables them to make much faster purchasing decisions.
Blockchain technology is also a lot more secure than more traditional methods. The blocks of information are kept fully secure. Privacy and security are major concerns for those trading in Forex, so this is one of the biggest benefits of the technology.
What challenges does it present?
As beneficial as blockchain technology can be, it also presents a few challenges for Forex firms. The lack of understanding of what the technology is and how it works can put firms off implementing it within their business.
There is also a lack of talent within the blockchain sector. So, getting it set up and running effectively can be quite difficult if there are no staff with the relevant experience to do it. While there is little in the way of regulation in blockchain at the moment, there are still laws which need to be followed. So, Forex firms need to ensure they seek advice from tech law experts like Withers.
Overall, blockchain technology can prove invaluable for businesses within the Forex sector. The above are some of the ways it can benefit firms, alongside some of the challenges they’ll need to overcome.
