One of the main tasks of blockchain technology is a radical change in various sectors of the economy. But, as practice shows, most of the opportunities for its development are concentrated in the financial sector, including banks. Despite the huge potential, many banking institutions are cautious or even distrustful of blockchain projects and there are a number of logical explanations for this. 

First, the uncertain legal status of tokens and cryptocurrencies leads to the fact that banks simply refuse to use them in their calculations. In addition, the technology itself has no legal status. At the moment, there are no precedents that data from the blockchain was accepted by the court as an evidence base in any disputes and it is not surprising that many banking institutions do not risk using the blockchain when making money transfers and other operations. Therefore, in the vast majority of cases, the transfer of funds is carried out using standard interbank transfers. 

Secondly, before the advent of the blockchain, all the mechanisms for the functioning of the banking sector had a clear structure of work and there are certain fears that the introduction of new mechanisms can lead to a certain destabilization. In any case, the use of new technologies requires a balanced approach and a lot of time. At the same time, attention is drawn to the www.lition.io site, which is a second-level blockchain infrastructure. Lition is innovating in the traditional fiat financial system using a unique private blockchain solution for central banks.

Thirdly, there are certain security concerns. Despite the fact that the blockchain perfectly resists cyber attacks, certain risks still exist. Most of the mechanisms are relatively immature and there is a high probability of phishing attacks, and the lack of clear development standards with a high degree of probability indicates the presence of a large number of malicious programs in this segment.

This is not a complete list of reasons why banking institutions are suspicious of the blockchain, but this technology is developing at such a rapid pace that in the near future the situation may change dramatically. 

What are the main advantages of blockchain technology?

Blockchain has a lot of indisputable advantages. First of all, we are talking about the fact that the databases of banks, enterprises or companies are placed not on one particular server that can be hacked, but in the network of millions of PCs. The chain of blocks can be supplemented with new information, and those that already exist cannot be changed. The authenticity of the information is checked by the network in automatic mode. It is also worth highlighting the following advantages:

  • Reliable protection of information;
  • Speed of operations. Transfers are carried out directly, without intermediaries, so the probability of delays is reduced to zero;
  • Decentralization. We are talking about the absence of a supervisory authority that could block transactions or limit functionality;
  • Minimal costs. Services that operate on the basis of blockchain technology attract the user with minimal commissions.

This industry is at the stage of rapid development, and the emergence of new solutions contributes to the global demand of Blockchain. The vast majority of experts agree that this technology has a huge future, and its potential has not yet been fully disclosed. 

Does blockchain technology have drawbacks?

Among the disadvantages of this technology, first of all, it should be noted the fact that blockchain chains are not ideal, since they lack common protocols (for example, HTML). Because of this, the system can be vulnerable to hacker attacks. Other disadvantages include:

  • lack of confidentiality;
  • a large amount of data is distributed;
  • there are difficulties with the implementation of several Blockchains;
  • there are difficulties with scalability (delayed operation of the circuit). 

Despite the existence of a certain number of shortcomings, the scope of application of blockchain technology is constantly expanding. Today it is not only banking, but also logistics, investment, trade, etc.