Ever felt like you don’t have proper control over your digital records or you are being observed all the time?
Did you know that a typical organization loses 5% of total revenue each year due to fraudulent activities in the company?
Perhaps you didn’t realize the fact that you are being observed or didn’t know millions of dollars are being stolen from companies each year. Or perhaps you did know about them.
It doesn’t matter, at least not anymore. What matters is the buzzword Blockchain, which is making the headlines these days by securing your online transactions and reducing fraudulent payments.
What is Blockchain?
By design, a Blockchain is a list of blocks containing a timestamp, transaction data and a hash pointer that links each block with one another. These blocks are linked and encrypted using cryptography, and they are inherently resistant to modifying the data.
They are used as an openly distributed ledger, recording transactions between the payer and receiver in a permanent and verifiable way without making them go through the messy banking system.
Is distributed ledger more efficient than working with a Bank?
A distributed ledger is introduced by the Bitcoin digital currency to remove central intermediates and to simplify the connection between the counterparties. Since the year 2012, almost 1 billion US dollars have been poured into these distributed-ledger investments.
But why so many investments through distributed ledger? There had to be a good reason why people find investing in distributed ledger easier than usual banks, right?
Actually, there are quite a few.
Banking payment system usually relies on a central authority, transfer value and the hierarchy to gain trust. When money is transferred from one person to another, the central counterparty makes sure the payment request is not cheated, which leads to costly, duplicative and time-consuming reconciliation by the payer and receiver.
But with a distributed ledger, a participant doesn’t need to trust other parties to make the payment or receive it because the transferring system itself is trustworthy due to cryptography in linking the blocks. With this secured and shared database, the participants have copies of their own that store the data. When changes are made in the form of payment, they get validated collectively by each participant and the information updates across the whole network instantaneously.
Besides, their strong cryptography allows only the certified parties to initiate and handle the transactions and the outputs of those transactions are irrevocable and accurate.
Moreover, these distributed ledgers are capable of identifying participants and executing transactions. It provides a powerful and effective platform to support many advanced functions and business logic that is defined as “smart contracts”.
Straightforward & simple investment into hedge funds with Blockchain.
A hedge fund is a limited partnership of individual investors who are willing to use a comparatively higher risk method. Usually, a full-blown hedge fund needs a private memorandum, an agreement of the limited partnership and a document of subscription. If the hedge fund has multiple principals, you might need a management agreement too.
Besides, they sometimes utilize 3rd-party placement agents to the investors which require additional documents. Finally, a tear sheet and pitch book are provided to the investors for an overview of the fund as collateral marketing material.
Too many papers, right?
With blockchain, you don’t need to go through all these lengthy processes of paperwork. Basically, the blockchain technology itself is maintaining and recording the data, reducing the labor of manual oversight of the transaction and decreasing paperwork that is required to fund a business. That’s why it is easier and hustle-free to invest in blockchain technology instead of using a regular bank and agreement system.