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Blockchain and its applications in finance industry Ketan Ingale1* 1Department of Management Sciences, Savitribai
Phule Pune University, Pune, 411007, Maharashtra, India Abstract Finance Technology and Blockchain have emerged as
broadly familiar topics amongst specialists working in the finance industry. They had been theorizing about blockchain’s
ability for years now, waiting to see how the growing technology might sooner or later affect the commercial enterprise.
Since its established order, blockchain technology has been to bring another revolution inside the enterprise. According
to the latest IBM sur- vey, ninety-one per cent of banks are making an investment in blockchain solutions, and sixty-six
per cent of institutions will quickly enough be jogging at a massive scale with blockchain. It appears that blockchain is, in
the end, assured, to shake up the financial markets in a way so as to benefit both financial establishments and
consumers. Blockchain is truly complicated to an observer, but at its core, it’s pretty simple. This article attempts to
synthesize and analyze available statistics with a focus on the role of blockchain, a monetary tool that can potentially
play an important position in the sustainable develop- ment of the worldwide financial system. The new era is
anticipated to carry large benefits to clients, to the current banking system and the entire society in widespread. This
article contributes to the writings related to the present-day entrepreneurial finance panorama for Blockchain. Keywords:
blockchain, finance technology, entrepreneurial finance, blockchain adoption, revolution The Digitized World The latest
worldwide monetary disaster had implanted considerable worry and obsession. For this same reason, the sector has
been setting more effort into strengthening the bank- ing and economic activities with stricter rules and regulations.
However, facts have shown that the stricter guidelines do not make the financial world a safer vicinity, rather display-
ing a lack of self-assurance, hindered international trade and economic growth, mainly for emerging economies.
Therefore, it remained debatable whether stringent rules have to be implemented or policymakers should encourage
additional growth of freedom and transparency for the public to directly contain and make their very own decisions with
powerful monetary tools. Fortunately, the cutting-edge virtual improvements mainly the appearance of the Blockchain
era, have unfolded new opportunities to solve this hassle. Research in this area has indicated that Blockchain not only
creates drastic changes in the nature of the banking system but can potentially reshape the complete economic system.
Today, banks have ended up almost completely digitized, making technological improvements critical to their
commercial enterprise. To fulfil each, the inner needs of creating strategic choices and external necessities from
customers, it’s essential for banks to take a look at the significance of Blockchain Technology. What is Blockchain?
Blockchain is a transaction database that consists of records about all the transactions ever achieved in the past. It
creates a virtual ledger of transactions and lets all of the individuals on the network edit the ledger in a secured way
that’s shared over the disbursed network of computer systems. In different phrases, Blockchain is a digitized system of
accounting records with records in details all transactions to a mathematical set of guidelines to prevent illegal
interference. For making any changes to the present block of information, all the nodes present within the network run
algorithms to evaluate, confirm and match the transaction information with Blockchain history. If the majority of the
nodes agree in favor of the transaction, then it is validated and a brand-new block gets delivered to the present chain.
For the first time in human history, two or more groups, be they businesses or those who might not even recognize
every other, can forge agreements, make transactions, and construct fee without counting on intermediaries (including
banks, rating agencies, and authority bodies) to affirm their identities, set up trust, or carry out the critical enterprise
logic - contracting, clearing, settling, and record-maintaining duties which can be foundational to all styles of trade. We
can visualize Blockchain as a vertical stack having blocks appearing as the foundation of the stack. The individual blocks
are related to every different block and refer to the previous block in the chain. The individual blocks are identified by
means of a hash which is generated with the use of a secure hash algorithm (SHA-256). A block has only one parent but
may have a couple of children each referring to the identical parent block, hence contains the identical hash in its
personal header and a sequence of hashes linking individual block with their parent block, creating a huge chain
pointing to the primary block referred to as a Genesis block. Research on the impacts of cryptocurrencies, decentralized
ledgers and Blockchain has shown that they may be doubtlessly effective tools to minimize costs and bring main
adjustments to the monetary fields in the long run. How Blockchain Works? Here are the five primary principles
underlying the Blockchain Technology. Distributed Database Everyone on a blockchain has permission to whole of the
database and its complete history. No single faction controls the records or data. Everyone can affirm the records of its
transaction partners head-on, without a middle man. Peer-to-Peer Transmission Communication happens at once among
peers rather than through a central node. Each node keeps and passes on the information to all other nodes.
Transparency with Pseudonymity Every transaction and its related value are seen by everyone with permission to the
system. Each node, or user, on a blockchain, has a unique 30-plus-character alphanumeric address that identifies it.
Users can pick out to stay anonymous or provide evidence of their identity to others. Transactions arise among
blockchain addresses. Irreversibility of Records As the transaction is added to the database and the accounts updated,
the information cannot be altered. Because they are related to each transaction report that got here before them
(subsequently the term "chain"). Different computational algorithms and methods are established to keep in check the
recordings on the database are eternal, chronologically ordered, and accessible to all others on the network.
Computational Logic The digital nature of the ledger means that blockchain transactions can be tied to computational
common sense and in essence programmed. So, customers can install algorithms and rules that mechanically cause
transactions among nodes. The Blockchain Application in Finance and Economics Blockchain Financial and Economic
Theory There are three predominant theories associated with Blockchain Finance and Economics. First, Illing and Peitz
(2005) proposed a digital economy principle that promotes the convergence of pc and communications technologies to
digitize all property and then sign up and transfer notarized digital property on the blockchain. Ultimately, it’ll recognize
the complete digitization of products and offerings from the production, income, and delivery chain. Second, unfastened
currency studied through Chen (2017) states the dialectical relationship between money and freedom from Marx’s
financial philosophy attitude. Specifically, the currency needs now not be issued via the relevant bank of a central
authority however ought to be absolutely decentralized and nonstate owned. All varieties of digital currencies may be
exchanged freely within the blockchain economic system. Additionally, the virtual currency repeats the emergence,
removal, and evolution of the competitive procedure at a rally fast rate. Last, Marcel, Oran, and Otgon (2010) followed
the information asymmetry principle to have a look at the trust hassle as the one-of-a-kind facts held with the aid of
each party. The concept gives methodological steerage for blockchain finance and economics due to the fact blockchain
can realize the most effective allocation of sources thru the form of digital rewards for mining to set up decentralized
credit score for universal participation. Overall Structure of Blockchain Finance and Economics As a brand-new
underlying generation, the intention of the blockchain is to apply new technologies along with the Internet of things, big
data, and cloud computing to efficaciously combine economic information regardless of what form of economic and
monetary facts format is to be included. Each layer has its personal specific traits. Data collection and analysis may be
addressed via big records and cloud computing technologies at the data layer. Meanwhile, the security problem of
blockchain information can be solved efficaciously with the aid of the use of the encryption algorithm. In the rules layer,
a ramification of conventional finance can be converted into a new monetary format primarily based on blockchain's two
basic regulations of distributed storage and decentralization. In the application layer, there are tradable economic
products, digital asset management, third party payment, and the cross-border payment at the side of the extra mature
virtual forex, all of which are the mainstream scenarios based totally on disbursed super-book accounts. Blockchain’s
Development in Financial Sector Drescher (2017) believes that the ideas behind the operation of Blockchain is the
absence of any form of imperative manipulations and its openness, but may also be responsible for limiting its adoption.
Andolfatoo (2018) asserts that Blockchain’s most crucial non-technical challenge is the shortage of legal recognition and
consumer popularity. Nevertheless, Blockchain has a comparative advantage in supporting decentralized autonomous
agencies (DAOs). As Carolyn Wilkins, Senior Deputy Governor of the Bank of Canada, points out, “It’s hard not to be
fascinated by something so transformative. Blockchain technology is being used in ways that have implications for
central banking that span all the functions that we have.” Although the improvement of the emerging era continues to
be immature and faces many challenges and obstacles, large global banks and other economic giants have rushed to lay
out the sector and make investment sources in generation development and test. However, time and skills are required
for technology to discover its opportunity. McAfee (2018) concludes that the authorities have to supply applicable
Blockchain knowledge to the general public and organizations, who will benefit from cutting-edge Blockchain era.
Although many projects as well as research papers are focused more on bitcoin and other cryptocurrencies, those are
just a small part of the Blockchain, which may be applied to numerous fields. We can also combine the Blockchain
technology with other technologies to create more widespread influence. For instance, it can be blended with Big Data
technology, given that the transactions on the Blockchain are usable for large information analysis. Influences of
Blockchain in the Financial Industry The process of financial disintermediation of Peer-to-Peer and third-party payment
platforms has been accelerated with the rise in the internet finance. The traditional financial business of commercial
banks has been severely impacted by the service-heavy and asset-light model and the reform of the traditional banking
industry is imminent. Traditional banks have started to lay out the internet finance because of the competition and the
user demand. The effect, however, is not ideal. It has also made the traditional banks to look for new technologies and
the new methods to boost the internet speed. Because of the new idea of storing and transmission of data, the existing
finance and Fintech industry might be fundamentally changed by the Blockchain technology. Cocco et al. (2017)
estimated that the Blockchain can potentially optimize the worldwide financial infrastructure and the asset transfer, as
compared to the existing essential system. In the long run, it has been seen that the impact of blockchain can minimize
the costs and bring major changes in the financial field. To improve the current banking system of the commercial
banks, they are actively developing and adapting the blockchain technology. Because of the Blockchain’s features such
as security, immutability and transparency, the middleman is out of the picture. On the other hand, Hassani et al. (2018)
states that along with the opportunities that the blockchain has to present, it might also bring some threats to the
finance industry. Since the Blockchain technology cuts out the middleman, some banks are still reluctant to adapt this
technology. The main reason being that banks are the major middleman in the transaction and are rewarded based on
the trust role for long time. So, what is the real power of this new technology that attracts banks to check it out? Real
Motivation for Banks Banks are considered as the backbone of the financial system. However, according to the Shenzhen
Institute (2016), banks have become outdated and their focus has been inclined away from consumer loyalty. Because
of the recent frauds that largely impacted the financial giants such as Goldman Sachs and Deutsche Bank, there are only
few people who would agree on the fact that today’s banking system can be considered as modern or “honest
institutions.” As per Heires (2016), for the last few years, many major corporations have started to look into the
blockchain technology. 35 patents related to Blockchain have been drafted by the Bank of America. UBS, Goldman
Sachs, Citigroup and Barclays have formed the R3 CEV consortium to look into the Blockchains potential of cost
reduction. Chain, a startup backed up by VISA and NASDAQ stock exchange, have launched Linq, which is based on the
Blockchain technology. The technical characteristics and the business models of the traditional banks have been
changed because of the adaption of Blockchain technology. The real motivation for adapting Blockchain technology by
international financial giants as well as local commercial banks, are as follows: First, the blockchain technology reduces
cost and value transfers. As the terminal maintenance and the purchase cost are high, commercial banks most of the
time need to invest a lot of money for the centralized database. The use of Blockchain technology can help solve these
problems by the use of decentralized ledger and its automation can build a model with low costs and transparency, with
no need for more spending. Second, blockchain helps in controlling the risks more effectively. Because of the
information asymmetry, the credit risks that arise, are reduced significantly. Also, with the use of Blockchain technology,
fund management’s efficiency is also improved. Blockchain technology has a multi centered nature. As a result of this
feature, each user in the Blockchain is treated as a node, which allows peer-to-peer transactions between the parties,
hence removing the need for an intermediary. Finally, Blockchain technology seeks innovative ways to generate profits.
Many financial giants are investing in the Blockchain technology startups or are working with these startups. In this
extremely competitive environment, the financial institutions are seeking innovative profit models to develop financial
products and open markets. Besides all this, the Blockchain technology can also address the frauds and operational risks
of various financial processes along with the inefficiencies and the high costs. Therefore, the blockchain technology,
because of its features such as non-tamperable, multi-centered, and public autonomy nature, the business model of
centralized banks has changed, the infrastructure optimized, service efficiency and user experience improved and
provided the banks an opportunity to transform themselves into internet financial business. Conclusion The technology
of blockchain has been considered as a revolutionary technology, after the internet revolution. As the electricity boosted
the productivity, internet brought a revolution in the data sharing and delivery, the blockchain technology is said to
change the way value is delivered as a machine to build trust. Because of the use of this technology, two major
problems of the digital economy are solved. One being that the transfer of the assets can be done through the chain,
and the second being the zero-cost trust. Although the Blockchain technology has many advantages, there are many
obstacles in the path of its application and development. In the end, we can refer Blockchain technology as a double-
edged sword. References Andolfatto, D. (2018), "Blockchain: What It Is, What It Does, and Why You Probably Don’t Need
One", Review, Vol. 100 No. 2, pp. 87-95. Assarzadeh, A. and Aberoumand, S. (2018), "FinTech in Western Asia: Case of
Iran", Journal of Industrial Integration and Management, Vol. 03 No. 03, p. 1850006. Chang, V., Baudier, P., Zhang, H.,
Xu, Q., Zhang, J. and Arami, M. (2020), "How Blockchain can impact financial services – The overview, challenges and
recommendations from expert interviewees", Technological Forecasting and Social Change, Vol. 158, p. 120166. Cocco,
L., Pinna, A. and Marchesi, M. (2021), "Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology",
available at: (accessed 19 March 2021). Demirkan, S., Demirkan, I. and McKee, A. (2020), "Blockchain technology in the
future of business cyber security and accounting", Journal of Management Analytics, Vol. 7 No. 2, pp. 189-208. Hassani,
H., Huang, X. and Silva, E. (2018), "Banking with blockchain-ed big data", Journal of Management Analytics, Vol. 5 No. 4,
pp. 256-275. "How Blockchain is chaning finance." (2021), Harvard Business Review, available at:
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S., Nanayakkara, S., Rodrigo, M., Senaratne, S. and Weinand, R. (2020), "Blockchain technology: Is it hype or real in the
construction industry?", Journal of Industrial Information Integration, Vol. 17, p. 100125. Singh, S. and Singh, N. (2016),
"Blockchain: Future of financial and cyber security", 2016 2nd International Conference on Contemporary Computing and
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31 No. 7, pp. 1749-1749. Zhang, C. and Chen, Y. (2020), "A Review of Research Relevant to the Emerging Industry
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Report Title: Blockchain in Finance Plagiarism Report

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Report Generated Date: 19 March, 2021

Total Words: 2995

Total Characters: 20204

Keywords/Total Words Ratio: 80.49%

Excluded URL: No

Unique: 84%

Matched: 16%

Sentence wise detail:

 Keywords Density

One Word 2 Words 3 Words

block 6.48% blockchain technology 1.59% blockchain finance economics

0.24%
chain 6.12% finance economics 0.31%
journal industrial information
blockchain 5.69% journal industrial 0.31% 0.18%
technology 2.32% blockchain finance 0.31% information integration vol 0.18%
bank 2.02% commercial banks 0.24% industrial information integration
0.18%

modern business process 0.12%

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