Blockchain is a distributed immutable transaction ledger. Blockchain is solving the trust problem where multiple “writers” are changing a distributed database decentrally.
Usually, we do have trust issues in decentral access to the distributed data – some parties might change the data for their advantage and overwrite the updates from the other participants.
Let’s think for a second this would be financial data and we see that the financial data needs trusted parties to take care of it. That’s why the network of the banks and financial intermediaries has emerged.
However, blockchain is a genius innovation, which solves this trust problem via the usage of cryptographic algorithms. This allows multiple “writers” to change the distributed database without the risk of someone changing someone else’s data records.
Let’s think again on the financial data – the financial intermediaries emerged as entities to safeguard and process their user’s data. Data processing needs lead to the scale effects – bigger entities have smaller costs of processing standardized data and are in a better competing position compared to the smaller entities. This resulted in the consolidation of financial intermediaries
However, these business components are not required anymore with blockchain functionality – everyone can safeguard and process his data with the blockchain.
What does this mean? The key reason, why the financial intermediaries were created – safeguarding and processing their user’s data – becomes obsolete. The financial intermediaries can be dis-intermediated. This shows the power of blockchain genius innovation.