Use of Blockchain Technology in Forex Trading
Blockchain Technology is quite active in the field of Forex Trading. There is no doubt that the economic market has seen a huge spike after its involvement. Blockchain is nothing but a way to record data and information which is difficult to manipulate or hack. Moreover, it acts as a digital leader that handles all transactions happening in the blockchain sector. Therefore, it is safe to store details about exchanging commodities or liquid cash between two parties. Today, we will discuss a few aspects that will determine the use of Blockchain in FX Trading.
What is Forex Trading?
Before proceeding, let’s have a look at the definition of Forex trading. Foreign Exchange Market or commonly referred to as Forex Trading, is the exchange of currencies. It includes transferring assets from one currency to another. It is one of the largest liquid money markets on the globe that functions quite smoothly. FX trading is mostly used by international users who want to transfer currency for trading, purchasing goods, or tourism.
Using Blockchain Technology in Forex Trading
We assume that you have the basic knowledge of Blockchain Technology and Forex Trading. Now, it’s time that you should learn about the advantages of combining both and having a better transaction scenario.
1. Improves Transaction Transparency
Transparency is the biggest issue in global transactions, especially when a large amount of money is involved. We have various elements like brokers, traders, bankers, fundraisers, and even government officials in every transaction.
Blockchain highly improves the overall as it registers details of each member or element. It will register transactions and the currency movement between the users. Moreover, it is not practically possible to modify the data reported through the process. Hence, you will have accurate information of the traction if any dispute occurs in the future.
2. Better Privacy
As mentioned earlier, Blockchain stores data and entries of every party involved in the Foreign Exchange. The data is quite secure and prone to modifications by third-party users at any level. A lot of liquid money is moving in and out of the country without affecting the currency value. However, it is important to keep track of these transactions to avoid crimes and other similar situations.
Blockchain will add up the security layer on these transactions in Foreign Exchange and prevent cybercrime. Hashing is the most common method, which is a simple yet effective way to avoid fraud.
3. Quicker Transactions
Last but not least, time is a big asset when you are transferring a lot of money, especially in terms of foreign exchange. Several brokers are switching to blockchain technology for their FX trades. No doubt that they end up cutting a lot of transaction fees in the process. Moreover, clients have a better view of the exchange due to improved transparency and speed. It is quite beneficial for both the traders and their clients in the longer run.
On top of it, financial institutions are accepting digital currencies as well, like Bitcoin. Therefore, you experience a quick payment transfer without wasting time on additional formalities.
The use of Blockchain Technology in Forex Trading will have a huge positive impact. However, we see a handful of brokers who are reluctant and disagree with the statement. According to them, increased transparency will affect their profits and eventually decrease margins in their pockets. We might see additional changes in Blockchain technology before moving on to the large-scale market.