Blockchain technology has brought countless innovations and possibilities to the financial sector. Find out about its main benefits! 

Blockchain has revolutionized financial markets. It enables, for instance, the creation and decentralized settlement of cryptocurrencies and tokenized assets.

It is clear that blockchain technology will become part of the daily lives of a substantial portion of the population, but at Parfin we believe that mass adoption will depend on institutional adoption of the technology. That is why Parfin has launched Parchain, a permissioned layer 0 blockchain that accelerates institutional use cases. Learn more here.

But do you understand what blockchain is and what are the main benefits of this technology? Find out everything you need to know! 

What is Blockchain? 

A blockchain operates as a ledger that records digital asset transactions. It is a digital network, either public or private, that offers security and transparency of operations to its participants. 

This record is immutable and reliable. The blockchain indicates, for instance, the amount of digital assets transferred, when the transaction took place, the account address of the sender and the receiver, and other details.

The blockchain stores this data by grouping it into "blocks" that are created periodically. In the Bitcoin protocol, for instance, every ten minutes a new block of transactions is formed and linked to the previous one, and so on. That is where the name blockchain comes from: it is a chain of blocks.

What can you do with a blockchain? Blockchains enable secure, intermediary-free transfer of value between two parties. There are countless use cases, one of the most interesting for financial markets being tokenization, that allows assets to be digitally represented through a virtual record on a decentralized database connected to the blockchain.

The advantages of blockchain for the financial sector 

Increased security and transparency  
All transactions carried out through the blockchain are recorded and all users can view transaction movements and histories. In the case of a permissioned blockchain, only network participants can access this information.

It is important to emphasize that the blockchain is immutable. Once transactions have been recorded, this data cannot be altered or deleted.

Greater efficiency and lower operational costs  
By leveraging blockchain technology, financial institutions can lower operational costs as the network offers asset settlement standardization, which may lead to the automation of internal and external processes.

When it comes to asset tokenization, there is a noticeable reduction in costs — securities issuance becomes less expensive. A study by Entoro shows that the cost of capital raising can be 40% lower through tokenization, as opposed to getting credit through private firms.

Introducing Parchain, Parfin’s blockchain 

The digital economy is here, and blockchain technology is the driving force behind this transformation. Keeping an eye on industry trends, Parfin has just launched Parchain, a layer 0 permissioned blockchain compatible with the Ethereum Virtual Machine (EVM) system, custom-built to meet the needs of institutional clients.

This pioneering technology offers the highest level of security and privacy, as well as interoperability between various private and public blockchains, enabling institutions to use blockchains in compliance with local regulations to leverage opportunities in the digital economy.

"We are building an ecosystem in which parties can communicate with the whole in a private and secure manner, without infringing local legislation," explains Alex Buelau, Parfin CPTO and co-founder. "Our aim with the Parchain ecosystem is to stablish a global standard for institutional adoption of web3."

Want to learn more about Parchain? Click here!