Blockchain is the growing technology used for wealth management systems. The safety of financial data is essential. Otherwise, it may lead to loss. Here blockchain systems are needed to keep the information that is impossible to change or hack. Data is stored in blocks and then linked together via cryptography. Two concepts to be successful in the stock market are minimising the risk and maximising the profit. Blockchain technology is used for stock market analysis that makes optimal stock transactions through automation and decentralisation. Blockchain technology is used by many across the world. Some countries are getting ready to use it for tracing securities lending, margin financing, and surveillance of system risk.
Blockchain is essential in the wealth management industry. They act as a digital wrapper around the digital asset and allow the exchange on decentralised networks. The wealth management industry always faces threats in data maintenance, client-related sensitive data management, and the company's reputation. In case of any customer data leakage, they lose their customer trust. The key factors of blockchain technology like decentralisation, consensus, and immutability can renovate the existing business models to make transactions more fluid than ever. In this way, blockchain technology upgrades the service quality in client onboarding, asset transactions, and portfolio management.
A sidechain is attached to another blockchain that allows tokens and other digital information from one blockchain to be used in another blockchain safely. After the use, it is moved back to the original blockchain. The sidechain is attached to its parent blockchain using a 2-way peg (2WP).
Before knowing the in-depth concepts, know about the peer-to-peer network. A peer-to-peer network (P2P) is a decentralised network communications model with a group of devices that store and share files where each device acts as an individual peer. Peer-to-peer networks are the foundation of cryptocurrencies, thus playing a vital role in the blockchain industry. A peer-to-peer network is based on the concept of decentralisation. Thus, this blockchain structure allows all cryptocurrencies to be transferred worldwide without needing a central server.
It is essential to know the four types of blockchain technologies before starting the trade as a beginner. It is hard to implement a blockchain-based solution if you don't understand the blockchain types and their impacts on the business models. The different types of blockchains are as follows:
A public blockchain is permissionless (restrictionless) and completely decentralised. It allows all the blockchain nodes to access, create, and validate the data blocks. Public blockchains are used for exchanging and mining cryptocurrency. Some popular public blockchains are Bitcoin, Ethereum, and Litecoin.
A single organisation controls these blockchains, and the central authority decides who can be a node. Some private blockchains are Ripple and Hyperledger, which are partially decentralised, and public access to these blockchains is restricted.
A consortium blockchain is a permission-needed blockchain governed by a group of organisations. Here you can enjoy more decentralisation than private blockchains with a high level of security. CargoSmart has developed the Global Shipping Business Network Consortium to digitalise the shipping industry.
Hybrid blockchain is a unique type controlled by a single organisation. Here, transactions and records are made private but are still verifiable. A hybrid blockchain allows organisations to create a private blockchain besides a public system. Thus they can administer who can access the data in the blockchain, and the data will also be made public.
A perfectly designed wealth management course helps you understand your financial goals, increase and maintain your wealth. OAWA offers a wealth management course (for students and professionals) that explains essential terms and concepts of wealth management. You can apply such theoretical knowledge and skills in any needed situations for your clients successfully.