To maintain their leading position, banks continue to actively establish research and development laboratories, testing centers, and partnerships with blockchain developers to understand this revolutionary and potential technology. Financial institutions were the first to invest, but now academia, government agencies, and consulting firms are also studying this technology. Of course, this research, including that done by entrepreneurs and developers, is to find new uses for Bitcoin or Ethereum blockchains or to establish other new blockchains.

This work has been ongoing for more than three years and is beginning to yield results. Although some parts are still unclear, we know that blockchain can be used for the following purposes:

Establishing digital identities Blockchain technology’s identity verification is done through the use of cryptographic keys. The combination of public and private keys shows a powerful digital identity reference based on ownership. The public key is used to identify individuals in a crowd (such as email addresses), and the private key is a way to express agreement in digital interactions. Cryptography is a crucial force in the blockchain revolution.

As a recording system, The innovation of blockchain technology lies in information entry and distribution. They are suitable for static (login) or dynamic (transaction) data, a revolution in record-keeping systems. When logging in, data can be stored on the blockchain in any combination of three ways: unencrypted data – which allows every participant in the blockchain to read and is fully transparent; encrypted data – which can be read by participants with decryption keys. Keys provide permission to access data on the blockchain and can also prove who added the data and when it was added. Hashed data – which can be presented with the function that created it to show that the data has not been tampered with. Blockchain hashes are usually combined with raw data stored off-chain. For example, when information subjects can be stored offline, digital “fingerprints” are usually partitioned into blockchains.

This shared record system can change the way different organizations work together. Currently, because data is usually stored on private servers, there are huge costs involved in the transaction process when involving process, program, and cross-check records.

Proving immutability The feature of a blockchain database is that it has its own history. Therefore, it is often immutable, which means that it cannot be changed. This characteristic of blockchain makes it possible to establish trust without intermediaries. In addition, it can prevent fraud and manipulation of records. By providing an immutable record of transactions, blockchain technology can provide trust and transparency to the financial system.