Open Finance - financial services infrastructure, based on open source Blockchain, can make FinTech largest digital transformation of the world. This system can turn into a new field for financial services by converting analogue liquidity (traditional currency existing in bank accounts) into digital liquidity (digital currency in digital wallets ).
As a result, there are new financial incentives that can help flourish innovations that could not have been made possible before. For a long time, technology has changed the economy. The dream of the community has always been to use technology to digitize financial services, increase competition, reduce risk concentration, and improve customer experience. Many are looking to achieve this goal in offering their products for sale in areas such as FinTech, TechFin, Open Banking and Permissioned Blockchains.
In traditional financial systems, banks have a particular role in the mechanisms of money transfer (liquidity) in the economy.
In a world where money transfers are not controlled by a network of banks, value can be moved in new ways that are not limited by physical boundaries. With the Open Finance infrastructure, we can build a system that collects money and cash flows in different ways.
In order to better understand the future of digital financial services, we can take a look into one of the most interesting examples today. It is the decentralized ecosystem (#DeFi) that is being built on Ethereum Blockchain.
The decentralized financial services apps built on Ethereum use Blockchain as the distributed, open source ledger. The ledger entries (such as who is owner or what is the date of transaction) are similar to those of Bitcoin, retaining proof of work (PoW) through consensus mechanisms.
We will write more about Ethereum "Open Finance" concept more in future posts.
Text and pictures by courtesy of FinMag (translated from Persian) https://finmag.ir/
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