Remember that time when you went on a vacation and had to pull out some cash, so you went to a local bank, used their ATM, took the cash and went on your way. Then a few weeks later you look at your statement and are dumbfounded by an insane charge you received from your bank?
I know I have had this feeling because it just happened to me. Well, it’s happened and continues to happen to a lot of us. Banks and financial institutions have been charging fees for basically everything they can think of under the sun for ages and has gotten away with it. Mostly because there really hasn’t been another choice.
Enter blockchain technology. A piece of technology that will once and for all dismantle the financial services industry and put the power back into the people rather than the corporation or financial institutions.
What is Blockchain Technology?
I know you have probably been hearing a ton of different things about blockchain lately, and heard bitcoin pop up everywhere. Bitcoin is a big part of the industry but just a small fraction of what can be accomplished from a long-term view and the industry as a whole.
Blockchain technology is a shared transparent ledger of transactions that eliminates the need for a trusted 3rd party to facilitate digital relationships. Think of it as an open accounting system that stores and records transactions between two parties online in an efficient, encrypted, and secure fashion.
To give you a better idea of the difference between bitcoin and blockchain check out this video.
How Blockchain Can Take Away the Middleman
Hopefully, from the video, you have a better understanding of bitcoin and blockchain technology to understand how people can go from one party to the next without passing through an intermediary or broker. Blockchain technology is something that will disrupt and get rid of a lot of jobs in the coming years.
To give you a better example let's take a financial advisor and go over how their job functions. Usually, they get paid healthy sums of money in the form of fees for initiating trades and managing portfolios on behalf of their clients. These fees can sometimes be in the 3-5%/yr range.
In the grand scheme of things, it may seem small but take into consideration that some people have bad financial advisors who give them minimal returns on their investment or they lose it all on behalf of their clients. In this case, they are still entitled to their 3-5% fee, how does that make sense? It doesn’t, and that's one of the reasons why the financial system is flawed and needs to be changed. Blockchain technology stands first in line to make this happen.
To give you an example of a company utilizing blockchain technology in the financial industry let me introduce you to TokenAI, the first decentralized investment platform powered by artificial intelligence. Its proprietary algorithm is able to scour the net for millions of data points and able to pick up on the warning signs of when a cryptocurrency will go up and when a cryptocurrency is supposed to go down.
No financial advisor or human being manages the portfolio of tokens that the tool generates. It’s all driven by artificial intelligence. The fees that you pay TokenAI to manage your investment are peanuts compared to what a bank or traditional financial advisor would charge you. Lowering fees is only one of the massive benefits of what blockchain technology will provide to consumers.
Compare the differences of paying a fee of 0.5% to 5% per year say over the course of 10-20 years. Depending on how big your portfolio is, this fee reduction you are paying per year is very significant. We’re talking savings of 1,000’s of dollars when most of the time these annual fees you are paying to advisors don’t require them to do very much work on behalf of you.
This is just one use case of how blockchain can and will cut out middlemen and brokers. If you are a broker or agent in any industry I’d be scared if I were you. The machines are coming.