What does this combination mean for the world of finance

What does this combination mean for the world of finance

The introduction of 5G technology is the hottest point of conversation these days, and for good reason. 5G has the power to completely transform the world of business and communications with an unparalleled increase in the speed and strength of your Internet connection. It will also play a pivotal role in enhancing the potential of various emerging technologies such as artificial intelligence (AI), augmented reality (AR), virtual reality (VR), and blockchain.

The impact of 5G technology on blockchain can be profound. The combination of the two could be a game-changer in the financial world. The banking sector, specifically, has already been using various forms of blockchain or Distributed Ledger Technology (DLT) for some time now for security purposes.

DLT technology enables highly secure transactions without the need for a central authority. For the end user, this means that even if the central servers of banks are compromised or inaccessible, the decentralized DLT will continue to process and maintain the transaction ledger. If blockchain networks can provide payment solutions, it could be of great importance to both underbanked and unbanked banks.

While 5G alone has the potential to boost an already successful micropayments segment; The 5G-powered blockchain can take digital and micro-payments to a whole new level.

5G will also be beneficial for the Internet of Things (IoT), which, as a result, will drive blockchain technology forward. Unique Blockchain features such as decentralization, security encryption, immunity from malware attacks, among others, could prove valuable for many innovations, such as smart homes and cities, self-driving cars, etc.

Blockchain technology as a technology requires huge network capacity to function optimally. This is another reason why 5G is a blessing as it is highly capable of providing the required network capacity.

Higher network capacity could also mean less block times and greater scalability, and this could be the biggest solution to the blockchain challenge to date. Although both Bitcoin and Ethereum have progressed in terms of volume, their transaction speeds cannot match the range that established financial institutions are accustomed to.

With 5G delivering speeds at the broadband level, digital assets should soon be able to catch up with financial giants like MasterCard and Visa in offering the number of transactions per second. This can change everything.

Blockchain is also improving the productivity of smart contracts. Oracles, which act as data feeds for connected smart contracts, are essential to the functionality of smart contracts.

This oracle requires constant access to the Internet to provide and receive data in order for this system to be practicable. Oracle and smart contracts adoption will be much easier, especially in rural areas, with the global reach of 5G technology.

Moreover, 5G will also improve connectivity for smartphone and tablet users, thus enabling greater network sharing. This means an increase in the number of active nodes, which leads to the diversification of the blockchain as well as the democratization of all over the world. In short, 5G will provide higher network capacity, greater scalability, higher node sharing, lower latency and less time to process blocks.

After mentioning all the positive aspects of the 5G network and the potential benefits of its cooperation with the blockchain, there are also some negative aspects. There is always a chance of malicious entities and devices joining the network and causing problems. But as bonding grows, this is an inevitable side effect.

With the launch of 5G, the demand for blockchain applications and digital assets may impose an excessive level of demand on these networks, leaving these networks with a lack of scale to keep up with, which is one of the potential challenges.

To sum it all up, 5G and blockchain collaboration has the potential to lead businesses and individuals around the world towards a better future.

(The author is CEO and CTO at Rooba.Finance.)

Disclaimer: The opinions, beliefs and views expressed by the various authors and forum participants on this site are personal. Crypto products and NFTs are unregulated and can be risky. There may be no regulatory path for any loss from such transactions. Cryptocurrency is not legal tender and is subject to market risk. Readers are advised to seek expert advice and carefully read the offer document(s) along with relevant important literature on the subject before making any kind of investment at all. Cryptocurrency market predictions are speculative predictions and any investment made will be at the expense of the readers alone.

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