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How Blockchain is Changing the Finance Industry: What to Expect?

MANTRA DAO, 11/26/2020, 7:52:34 PM

The world’s financial system today services billions of people and brings about trillions of dollars’ worth of transactions a day. Despite its magnanimity, the system gets plagued with problems. These problems heavily burden the system through additional costs due to delays and fees, exposing the system to crime and fraud, generating burdensome and redundant paperwork.

An astounding 45% of financial intermediaries such as money transfer services, stock exchanges, and payment networks are victims of crimes of an economic nature. In comparison, the economic crime faced by the entire economy is only 37%. When comparing it to technology sectors and professional services, they stand at 27% and 20% respectively. It is not surprising that regulatory costs continue their trend and rise further and are still a cause of bankers’ concern. Ultimately, it is the consumer that bears the brunt of all these costs that add up.

This raises a powerful question - why is the current financial system so inefficient?

Firstly, it is an ancient system that uses paper-heavy processes and industrial technology covered under a blanket of innovation, secondly, it is set up as a centralized system that limits its ability to change rapidly and makes it vulnerable to evolving attacks and failures, lastly, and importantly, it excludes large portions of the population (billions) from having access to financial tools.

Banking institutions and bankers have predominantly shunned any significantly creative solutions that would destroy the existing financial system’s structure, which has prevented progress and vitality in this realm. All this was until the solution to this progress limitation emerged - the Blockchain.

What Is Blockchain Technology?

You may be aware of what Bitcoin is. The technology behind this cryptocurrency that facilitates bitcoin transactions while ensuring security and successful completion is the blockchain. In descriptive terms, a blockchain is a transaction list or a “secure ledger”. The main features of this technology include, but not limited to:


Imagine: a large sum of account book copies exists. Bitcoin’s blockchain is an example of an open blockchain and is replicated many times and published in different locations. Newer transactions are continually broadcasted to a wide chain of participants. These participants add those newer transactions to the account book copies. Nobody is managing the account book, though - the system was created so that each account book copy includes the same information.


One of the foundational elements of a blockchain is that it has to maintain a detailed history of transactions. Since there are numerous copies of the account book, it is hard to manipulate or erase any executed transactions. To successfully modify a transaction, each copy of that transaction in the account book across all locations would have to be modified – which makes it impossible to tamper with.


Decentralized Blockchain’s architecture facilitates single points of failure to get eliminated from the system. This foundation eliminates the need for intermediaries of data such as operators of messaging systems, utilities, and transfer agents.

Additionally, Ethereum and Polkadot blockchain makes it possible to implement secure application code, which is architected to be tamper-proof and shielded from malicious parties and fraud - this makes it practically impossible to hack into.

Transparency and Trust

Blockchain uses shared processes, protocols, and mutualized standards and acts as a universal, single source of truth for the network participants. The accounting ledger’s transparency and security facilitate easy collaboration, easy management of data, and execution of agreements between parties in a business network in a secure and trustworthy manner.


Blockchain facilitates the conception and execution of smart contracts, a highly secure software that aids in the automation of business logic, which fosters more trust and improves efficiency.


Blockchain offers industry-leading tools to accomplish granular levels of data privacy across the software stack’s every layer. It makes it possible to share data in the business networks selectively. This environment drastically increases trust through improved transparency while still making it possible to maintain confidentiality and privacy.

High Performance

The combination of hybrid and private networks are designed to allow for transactions in the hundreds per second while also providing contingency for surge activity periods.


The possibility of interoperation between public chains and private chains offers enterprise solutions integrity, a resilient framework, and the global reach of the mainnet.

Blockchain Impact on Finance Industry

The earliest application of Blockchain was that of digital currencies. These digital assets were created as a potential alternative to centralized government-controlled fiat currencies.

The technology’s ability to facilitate the transaction of alternate digital currencies that are viable makes up only one of Blockchain’s many efficient applications. This technology is cryptographically secure, decentralized, and p2p, and it has been touted to be the “internet of value”. While blockchain’s value is not limited to only economic value, certainly, one of the areas that are impacted the most by this nascent technology is the finance sector.

Recordkeeping, authentication, identity verification, and settling have predominantly been functions of financial service providers. It is not a secret that these financial service providers are heavily compensated for providing those services. With the introduction of Blockchain’s transparent and automated digital ledger system, there is the potential of reducing the need for financial service providers, such as banks and payment processors.

Blockchain is also referred to as a “native medium for value”. It is adaptable and can accommodate any asset ranging from money, intellectual property, or company shares. They can be moved, stored, exchanged, transacted, and overlooked without the need of financial service providing intermediaries to establish trust. While it is clear that the potential blockchain impact on the financial industry is enormous, we still might be very far away from broad adoption levels.  

Let’s take a closer look at some of the possible blockchain applications in finance.

Financial Industry Systems

One of the vital blockchain applications in finance lies in the conventional financial sector, specifically in financial asset trading and internal accounting. In addition to that, blockchain in finance gets also used in loyalty point systems, crowdfunding, and local currencies.  

Organizational record storage

A multitude of businesses worldwide run very complex international operations that require many levels of recordkeeping. To keep track of internal and external financial transactions, businesses need some kind of ecosystem that can provide them with a bigger picture of the current operations.

Blockchain technology can make this process smooth and transparent by providing finance departments at different companies with access to immutable blockchain records, so the managers can have their hand on the pulse of their businesses.

Safe tracking

Unfortunately, many businesses are still vulnerable to theft and counterfeiting, especially such sectors as cosmetics, luxury goods, and electronics. Blockchain records can significantly reduce these financial risks by generating tamper-proof records for each production process phase. Once the record get stored in the blockchain network, retailers can securely track the journey of the product back to the very beginning.

Cross-border Payments

Cross-border payment is probably one of the most common uses of Blockchain technology. Typically, global transactions come with a hefty fee. This problem can get eliminated by using Blockchain and smart contracts, where transactions get carried out without any middleman.

Claims Processing

It is not a secret that insurance claims often become an easy aim for fraudsters. Blockchain technology can help eliminate this problem by automating the process of submitting and reviewing claims.

Programmed Compliance

Yet another one of blockchain applications in finance is in auditing processes. Once transactions get recorded on the blockchain, businesses could share access to blockchain networks with auditors to inspect every transaction that took place. In addition, reporting processes could also be simplified using blockchain, as reports could automatically be updated based on the added transactions.

Global Trade Finance

Global trade is a complex process that involves exporters and importers that require transaction verifications before they can close the trade. Thanks to blockchain technology, this process can be much faster if traders get provided with access to documents and records at during transaction processing.

How Blockchain is Changing Banking

Aside from a myriad of blockchain applications discussed above, there is so much more to this technology. In fact, the revolutionary features of blockchain have stirred up some changes in the banking sector already.

As you’ve already understood, the potential applications of decentralized blockchain applications within the finance sector are virtually endless. A recent report on blockchain in the banking industry by Deloitte states that global banks appear under pressure to reduce costs and drive profitability. Regulatory pressures and investor requirements are cornering banks, and innovative fintech startups further exacerbate the situation. All this is making the banking industry struggle to maintain profitability. By adopting blockchain technology, banks could significantly increase their efficiency levels and reduce overheads.

Transactions Processing

One of the key Blockchain uses in banking is in transaction processing. Since conventional transactions are heavily dependent on counterparties, a simple debit or credit card payment and transfer processes include up to six steps that involve several financial intermediaries. The same level of complexity applies to transferring money from one bank account to another.

Blockchain-fueled apps can eliminate the need for third-party involvement. The payment, clearance, and settlement of transactions could become a simple process between the bank account and a merchant.


One of the critical roles that global banks have to fill in of an identity verifier’s role – they have specific processes in place that are necessary for verifying the identity of customers and counterparties. Banks are then reporting to regulatory authorities, thus ensuring that their customers do not use their services for any criminal activities.

Identity verification is not only a lengthy and burdensome process; it also is costly. In addition, regulators are ready to impose large fines for failure to comply with the process. At the moment, there is a lot of developmental work being done concerning the integration of Blockchain-built systems for customer identity verification.

Data Storage

The impact of blockchain on the financial industry can get realized when it comes to safely syndicating all of the customer’s personal information and financial history across various financial services. To take advantage of this opportunity, banks could have their customers record all of their transactions into one blockchain-based system. Customers would have total control over their personal data and provide banks and other financial service providers with access when needed.

What’s Next for Blockchain in Finance?

Provided the potential of the global blockchain impact, several firms in the financial industry are heavily investing in blockchain-based solutions for their businesses. Some of the big players, such as Credit Suisse, JPMorgan Chase, and Citigroup, are already pouring money into the blockchain space.

It seems that the driver behind these decisions is the willingness to decrease the costs and friction. Considering the complexity of intermediary financial structure, blockchain looks like a winning solution to the problem.

By cutting transaction costs across the financial industry, blockchain can support peer-to-peer collaboration that could potentially make many of the existing financial organizations redundant.

MANTRA DAO: A Decentralized Finance Solution Powered by Blockchain

Coming back to the issues we’ve discussed at the beginning of this article, it is worth noting that there are already countless solutions in the blockchain space that aim to solve them. Every day, we witness the emergence of new projects that strive to end the problems of the modern financial system. Yet, the majority of blockchain projects in the space lack certain important features, including interoperability, to efficiently solve those issues.

However, one of the innovative projects that disrupt the current financial industry and ensures to address the drawbacks of the blockchain systems at the same time is called MANTRA DAO.

MANTRA DAO is a community-powered decentralized finance platform, where users can take advantage of its staking, lending, and governance features. The platform is built on interoperable decentralized structures, and its users fully control it. MANTRA DAO’s governance mechanism is built around a digital token dubbed OM, which enables its holders to take part in decisions that affect the whole system. Besides, the OM token allows users to access many of the network’s economic incentives. Users are able to obtain the OM token as a reward for their contributions to the platform.

MANTRA DAO’s key mission is to give financial control back to the community and enable people to store and grow their wealth together. While addressing the limitations of traditional blockchain systems, MANTRA DAO also strives to deliver an ultimate solution to conventional financial system woes.

In short, the MANTRA DAO platform has the following features:

-A savings and lending platform, allowing depositors to earn interests on their pooled digital assets;

-A digital token OM, which provides its holders with voting power in the ecosystem. Users are able to participate in decisions regarding inflation, interest rate, and deflation rates;

-KARMA reputation protocol, which has two functions within the MANTRA DAO network. The protocol increases the chances of OM token holders getting benefits from various financial incentive schemes and assesses the voting power of OM holders.