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BLOCKCHAIN Mini Project
BLOCKCHAIN Mini Project
MINI PROJECT-2
ON
“ROLE OF BLOCKCHAIN IN FINANCE SECTOR”
By
Anushi Agarwal
Roll no. 2301920700075
Session: 2023-24
Under the Supervision of
Dr. Kriti Swarup
DECLARATION
I hereby declare that the work presented in this report entitled “MINI PROJECT-2", was
carried out by me. I have not submitted the matter embodied in this report for the award of
any other degree or diploma of any other University or Institute. I have given due credit to
the original authors/sources for all the words, ideas, diagrams, graphics, computer programs,
experiments, results, that are not my original contribution. I have used quotation marks to
I affirm that no portion of my work is plagiarized, and the experiments and results reported
in the report are not manipulated. In the event of a complaint of plagiarism and the
manipulation of the experiments and results, I shall be fully responsible and answerable.
(Candidate Signature)
GL BAJAJ
INSTITUTE OF TECHNOLOGY &MANAGEMENT
Approved by A.I.C.T.E. & affiliated to Dr. A.P.J. Abdul Kalam Technical University
CERTIFICATE
This is to certify that ANUSHI AGARWAL, Roll No. 2301920700075 has undertaken this
project titled “ROLE OF BLOCKCHAIN IN FINANCE SECTOR” for the partial fulfillment of
the award of a Master of Business Administration degree from Dr. A P J Abdul Kalam
I wish him/her all the best for his/her bright future ahead.
Date:
Project Supervisor
Department of Management Studies
Head of Department
I would like to express my sincere gratitude to all those who have contributed to the
successful completion of this Mini-Project Report. Their guidance, support, and insights have
First and foremost, I extend my heartfelt thanks to my faculty mentor for his/her unwavering
Secondly, I appreciate the industry professionals, practitioners, and experts who generously
shared their time and knowledge during interviews, surveys, and interactions. Their real-
supported me throughout the course and constantly reviewed my progress. In conclusion, this
project has been a rewarding learning experience, and I am grateful to everyone who
Thank you.
Sincerely,
Anushi Agarwal
03/07/2024
INDEX
1. DESCRIPTION OF INDUSTRY
2. LITERATURE REVIEW
3. INDUSTRY ANALYSIS
6. PESTLE ANALYSIS
7. CONCLUSION
8. REFRENCES
DESCRIPTION OF INDUSTRY
An immutable, unhackable distributed ledger of digital assets is a platform for truth and
trust. The implications are staggering not just for the financial services industry but also
The Financial Industry has been trying to experiment with blockchain by replicating
existing asset transactions on the blockchain. While this allows some scope for efficiency
implication of a blockchain solution, what gets missed out is the ecosystem implications
that is built to support the transfer of digital assets amongst market participants in real
time. Using any preferred blockchain’s APIs one can showcase a dramatic reduction in
asset transfer costs and timelines. Most bank implementations are focused on this
aspect. But while scaling proof of concept into a real-world scenario, financial institutions
end up implementing the same application layer that exists currently with all the current
Commercial Banks: Provide a wide range of financial services, such as accepting deposits,
Investment Management:
Hedge Funds: Private investment funds that employ various strategies to generate high
returns for their investors.
Private Equity: Funds invested in privately held companies, aiming to provide capital
Insurance: Life Insurance: Offers financial protection to individuals and families against
Property and Casualty Insurance: Covers damages to property and legal liabilities arising
Digital Payments: Companies providing online payment solutions, mobile wallets, and
Peer-to-Peer Lending: Online platforms that connect borrowers directly with lenders,
According to Yaga et al. (2019) blockchains are a type of digital ledger that cannot be altered
without leaving clear evidence of having been altered. Since these digital ledgers are
a bank, corporation, or government. This is due to the lack of a necessity for a centralized
repository and authority. At its most basic level, blockchains enable a group of people to track
transactions among themselves via a shared ledger. Because of how the network was designed
to work, once a transaction has been recorded on a blockchain, it cannot be modified, making
unchangeable ledger that makes it easier to record transactions and manage assets within a
commercial network. An asset is anything that can be physically touched, like a house, car,
money, or a piece of land. However, intangible things like intellectual property, patents,
copyrights, or trademarks can also be viewed as assets. A blockchain network can be used to
track and exchange anything of value, which lowers the associated risks and expenses for all
parties involved (Saberi et al., 2019; Yaga et al., 2019). According to Yaga et al. (2019), the
introduction of the Bitcoin network in 2009 marked the beginning of widespread public
awareness of blockchain technology. When using Bitcoin and other systems that are
theoretically similar to it, it is hypothesized that the transfer of digital information that
The first of several cryptocurrencies currently in use was Bitcoin, and there are currently
sign documents and transfer their rights to those documents to other users. This
transmission is publicly recorded in the Blockchain data, allowing all network participants
to independently verify the validity of the transactions. The durability of the blockchain in
the face of attempts to alter the ledger is aided by the use of cryptographic techniques as
well as the fact that each participant in the bitcoin blockchain is in charge of keeping and
administering their copy of the ledger. Blockchain technology’s advancement has made it
or maybe cryptocurrency applications in general. Nevertheless, this is not the case. This
image continues to exist even though the technology is now used in a greater variety of
Saberi et al., 2019; Yaga et al., 2019). Since businesses are dependent on information and
their success is directly proportional to the speed with which they receive and act upon that
information, “blockchain technology is ideally suited for the delivery of information since
it provides information that is, immediately shared and completely transparent and that is,
stored on an immutable ledger that can only be accessed by network members who have
been granted permission to do so”. A blockchain network can keep tabs on orders,
payments, accounts, production, and a lot more. Since members of the network share a
single view of the truth, you can view all of the details of a transaction from beginning to
end”. This provides you with increased confidence, in addition to new opportunities and
efficiencies.
INDUSTRY ANALYSIS
The finance industry is a broad sector that encompasses various financial services,
companies. It plays a crucial role in facilitating economic growth, capital allocation, and
understanding the industry's dynamics, trends, and challenges is essential. This industry
profile provides an overview of the finance industry, highlighting its key segments, trends,
Key Segments:
1. Banking:
2. Investment Management:
Hedge Funds: Private investment funds that employ various strategies to generate high
Private Equity: Funds invested in privately held companies, aiming to provide capital
3. Insurance:
Life Insurance: Offers financial protection to individuals and families against the risk of
death, providing benefits upon the policyholder's demise.
Property and Casualty Insurance: Covers damages to property and legal liabilities arising
Digital Payments: Companies providing online payment solutions, mobile wallets, and
Peer-to-Peer Lending: Online platforms that connect borrowers directly with lenders,
5. Industry Trends:
analytics, and cloud computing are transforming the finance industry. Fintech companies
are disrupting traditional financial services, offering innovative solutions and improving
efficiency.
Regulatory Environment: Stringent regulations have been implemented since the global
Compliance and risk management have become critical focus areas for financial
institutions.
sustainable investing, driving the demand for ESG-compliant products and services.
Digital Transformation: The industry is experiencing a shift towards digital channels, with
online banking, mobile apps, and digital customer experiences becoming the norm.
Career Opportunities:
Risk Analyst: Assess and manage financial risks, including credit risk, market risk, and
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44
foreign banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural
total number of ATMs in India reached 213,145 out of which 47.5% are in rural and semi-
urban areas.
According to the RBI, bank credit stood at Rs. 116.8 lakh crore (US$ 1.56 trillion) on 31st
December 2021.
As of February 2022, credit to non-food industries stood at Rs. 114.10 trillion (US$ 1.53
trillion).
In FY18-FY21, bank assets across sectors increased. Total assets across the banking sector
(including public and private sector banks) increased to US$ 2.48 trillion in FY21.
In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion
Source:
RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
(Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the
banking sector. Total equity funding of the microfinance sector grew 42% y-o-y to Rs.
As of February 21, 2022, the number of bank accounts opened under the
government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana
(PMJDY)’—reached 44.63 crore and deposits in the Jan Dhan bank accounts totaled Rs.
Rising income is expected to enhance the need for banking services in rural areas, and
India is the world's largest market for Android-based mobile lending apps, accounting for
~82% of all online lenders worldwide. India currently has 887 active lending apps, which
is relatively low, as there are few suppliers of blockchain technology and the technology
each other.
EMERGING TRENDS OF BLOCKCHAIN TECHNOLOGIES IN THE
FINANCE INDUSTRY
Buying and selling stocks and shares has always involved a lot of third parties, such as
brokers and the stock exchange itself. Here is how trading works:
● The transaction is sent to the Central Counterparty Clearing House for risk
evaluation.
● The buyer’s or seller’s representatives work with the Central Securities Depository
● The transaction is sent to the Registrar or Transfer Agent of Initial Trade to update
● As you see, the traditional stock exchange process involves lots of stages and
intermediaries and enable trading to be run on computers all over the world. No
company, was planning to use blockchain for their Private Market Platform. They
were going to implement a colored coin concept that could help to distinguish the
coins used for trading from other coins. Besides, together with Citigroup, Nasdaq
invested into the Chain blockchain ledger to power a shared and trusted distributed
2. Trade Finance
Blockchain also plays an important role in the trade finance sector – financial activities that
are related to commerce and international trade (not stock exchange trading). Even in
today’s disruptive world of technology, many trade finance activities still involve lots of
paperwork, such as bills of lading, invoices, letters of credit, etc. Of course, many order
management systems allow us to carry out all this paperwork online, but still, it consumes
lots of time.
partnered with Barclays to complete the world’s first blockchain and banking trade
transaction. In 2017, IBM and Maersk collaborated to work on the first cross-border,
Online financial transactions are impossible without identity verification. However, this
● Authentication: The bank client needs to prove their identity every time they log
in to the service.
services.
startups that are using blockchain to disrupt banking and working on blockchain-
● Tradle uses blockchain to store proofs of data verifications and give total
ownership and control of data to the owner. This means the customer manages the
sharing with banks directly, thus the customer becomes the utility. Tradle’s
approach enables the owner to share their data across lines of business, with any
institution and across any border without breaching any data locality laws, or
● Another example is ID2020, a project aimed at creating digital identities for people
who have no paper IDs. The project is supported by Accenture, Microsoft, and the
Rockefeller Foundation.
4. Syndicated Lending
banks (a syndicate). Due to several participants involved, the traditional processing of such
syndicated loans by banks can take up to 19 days. Banks that process syndicated loans face
● Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) – legal actions
distribute tasks related to local compliance, KYC or BSA/AML and link them to a
● Usage Examples: In 2016, Credit Suisse, Symbiont, R3, and Ipreo successfully
the syndicated loan market. In April 2018, seven international banks, specifically
BNP Paribas, BNY Mellon, HSBC, ING, Natixis, and State Street, have united to
loans.
digitalized relatively slowly. The reason behind that may be in strict regulatory
domain that can be transformed with the power of blockchain technology finance, from
Instead of keeping separate records based on transaction receipts, companies can write
their transactions directly into a joint register, with the entries distributed and
cryptographically protected. As a result, the records are more transparent, and any
the transactions. In addition, blockchain’s smart contracts can be used to automatically pay
invoices.
● Usage Examples: In 2018 PricewaterhouseCoopers announced the launch of the
first blockchain auditing service that will allow checking how the companies are
Blockchain finance can also help individuals and small businesses to quickly get loans
based on their credit history. It may take a long time for lenders to review the borrower’s
credit history. Traditional business credit reports provided by third-party credit bureaus are
not available for small business owners. Besides, paying companies to access their sensitive
data sounds strange and insecure. However, blockchain can provide tools that will allow
borrowers to make their credit reports more accurate, transparent, and securely shareable.
● The data owner places their transaction history into the blockchain and secures it
● The hashed encrypted transaction is stored inside the blockchain with timestamps
and metadata.
● The smart contracts identify and verify the potential data based on the data owner
control criteria.
● The blockchain engine filters the data and returns the results.
connects lenders and borrowers in any country for affordable and verified loans.
7. Hedge Funds
investors (limited partners). However, hedge fund participants are traders rather than
ordinary investors. The purpose of a hedge fund is to maximize investor returns and
minimize risks. According to Autonomous NEXT, the number of hedge funds that trade
cryptocurrencies has doubled between October 2017 and February 2018. However, one
should distinguish between the traditional crypto hedge funds and decentralized crypto
hedge funds.
Fund, Blocktower Capital, CoinShares, Crypto Asset Fund, and many others.
CRITICAL ANALYSIS (PROS AND CONS) OF THE BLOCKCHAIN
Blockchain Pros
● Trade Finance:
Another area where blockchain is expected to have a significant impact is in trade
financing. All financial activities relating to international trade and commerce are
referred to as trade finance. Did you know that invoices, letters of credit, and bills
are still used in many trade finance transactions today? Many order management
systems allow you to complete this task online, but it takes a long time.
Blockchain can provide a tamper-proof digital ledger that can be used to track and
verify financial transactions. It can also enable faster and more secure cross-border
payments, reduce fraud, and increase financial inclusion for those who lack
● Disintermediation:
First of all, with blockchain, you get a distributed system. It means that it gets rid of
any middlemen from your system. But how is that an advantage? In reality,
middlemen tend to be the third-party source that connects you to your services.
However, in the business world, from every service the middlemen offer, they get a
cut. In reality, a small amount of payment might not seem like much, but it does add
Other than that, there’s no way of knowing whether the middlemen would be honest
with their services. In reality, corruption runs deep, and in many cases, these
intermediates tend to abuse enterprises and consumers for their personal gain. Thus,
● High-Quality Data
distributed ledger system where it stores data. But how does it provide high-quality
data? Well, you need to know that low-quality data would not convert into high-
Anyhow, this distributed ledger technology offers a consensus process that allows
you to filter out any bad data with useful data. It means that no one can just add any
So, when every piece of information is being verified before getting added to the
Moreover, it also gets rid of the issues that come from human-made errors. As every
Blockchain offers durability at its best. You could think of it as the internet
where there’s built-in robustness. In reality, the overall structure of the technology
it makes sure that there is no single point of failure or any single entity controlling
it.
This quality makes the system inherently durable. More so, as no one can alter the
blocks, it remains to be a solid secured platform. Other than that, it’s quite efficient
other network systems out there, blockchain offers the highest level of integrity so
far. But what does it mean? In reality, it means that all your data will always be the
right one, and no one can alter them once it’s on the ledger.
More so, the process of storing the information and consensus processes is also
robust. Moreover, any user can’t just make changes to the verification as he/she
pleases. Thus, it would offer accurate and reliable data every single time when you
transact or store any other information. On the other hand, every blockchain’s hash
For the next advantage in this blockchain pros and cons guide, we’ll be elaborating
system where you can’t change any single form of data or let alone delete them
completely.
structure. As every single block will have a Hash ID, any changes to that block’s
data would change the ID drastically. And it’s impossible to recreate the same Hash
ID again.
Thus, if anyone tries to change the data, all the other users would notice it right away.
Anyhow, most of the ledger system on this technology is also open for everyone to
see. Even in private blockchains, there is common ledger information that anyone
Another great advantage in this pros and cons of blockchain guide is the data
and offer integrity. All of these characteristics result in the reliability and longevity
of the technology.
Furthermore, as no one can just change the rules of the blockchain as they please, it
remains intact. More so, as it can offer viable solutions for various business issues
Many enterprises are already considering altering their legacy networks with
● Redundant Performance
In reality, the computation needs of this technology are more repetitive than
centralized servers. It’s because every time the ledger is updated, all the nodes need
It’s because the distributed nature of the ledger system mandates that every node
should have a copy of the ledger system. Thus, it needs to undergo the same process
Another con of blockchain is the signature verification process. Basically, for every
verification.
It then uses the ECDSA (Elliptic Curve Digital Signature Algorithm) to ensure that
the transaction happens between the correct nodes. Thus, every node needs to verify
the authenticity of the user, which can be a tricky and complex process.
● Private Keys
To transact on the network, you’ll need to own a private key. Even though other
users can see your public key, a private key is much more crucial as it remains
hidden. Furthermore, all the blockchain addresses will have a private key.
You need to keep your private key secured by any means if you don’t want other
people to misuse your assets. However, if you lose your private key, you’ll lose
access to your funds on the network, as well. There’s no way to recover them
anymore.
PESTLE ANALYSIS
A PESTLE analysis of blockchain technology in the finance sector would examine the
political, economic, sociocultural, technological, legal, and environmental factors that could
Political: Government regulations and policies around digital currencies and blockchain
technology can impact adoption and implementation. . Regulators globally have raised the
alarm over cryptocurrencies, saying they may aid money laundering and terrorist financing,
hurt consumers and undermine trust in the global financial system. Such concerns over
opposition and regulation. However, due to the decentralized nature and lack of power
structures inherent in cryptocurrencies, many view regulations could stabilize the market
in order to drive adoption and growth and reduce the volatility that has been a hallmark of
the industry. Regulations will offer greater legitimacy and give users and institutional
Economic: Blockchain technology has the potential to reduce transaction costs and
increase efficiency in financial transactions, which can have economic benefits. “In
cryptography we trust”, undoubtedly trust is the single most important element in the
banking industry, and thus why they exist. Amid G20 summit 2018, the ministers and
central bank governors were warned that cryptocurrency could threaten international
financial stability with greater use and interconnections with the rest of the financial sectors.
Crypto assets raise a host of issues around consumer and investor protection.
Cryptocurrency dangers also come from their use to shield illicit activity and for money
Stability Board Chair Mark Carney urged the finance ministers to lessen the risks by
working together to improve conduct, market integrity and cyber resilience in the
cryptocurrency sector (Terzo, 2018(a)). Without these improvements, the G20 advisory
unit chief cautioned confidence in the global financial system could shrink if
(Knutson, 2018). Will cryptocurrency eventually substitute the current financial market, or
influenced by societal attitudes towards new technology. For example, some people may
be hesitant to adopt blockchain-based systems because they are unfamiliar with the
technology or have concerns about its security. Additionally, some people may be more
data stored in a blockchain facilitate trust and efficiency between users in an unprecedented
way. Marie Wieck, IBM’s general manager of blockchain, indicated that Blockchain has its
origins in digital transformation and disruption, it is the answer to the 2008 financial and
mortgage crisis. A rather interesting note is that most people focus on blockchain’s initial
entry point and use case, Bitcoin. They associate anything blockchain with Bitcoin and that
is not right. There is much more to blockchain than Bitcoin and cryptocurrencies. Currently
IBM is working on its Hyperledger project on food-chain safety and digital identity. One
of the biggest disadvantages of having a centralized data storage system is the risk of data
breaching of consumers’ private info. Equifax, one of America’s three major credit
reporting agencies, announced back in September 2017 that their system had been
breached, exposing information of approximately 143 million consumers, the affected data
included sensitive materials such as Social Security numbers, driver’s license numbers, and
even credit card numbers (Bernard, 2017). This is where blockchain technology kicks in, to
Legal: Legal frameworks around digital currencies and blockchain technology can impact
The energy consumption of blockchain technology can impact its sustainability and
environmental impact Reduce Remittance cost and protect own assets The case of Bitcoin
have created an opportunity for people in Africa to control and protect their assets. In
countries where there are political crisis and economic turmoil, people live in a chaos,
which in turn caused them to lose their trust to the government and the financial
However, this would prove to work against the idea of distributed systems. By cutting out
the middleman, the cost of remittance can be drastically reduced as well as the hassle
required to receive international money transfer. This eases the life of those in the
developed world, at the same time it provides a platform for illicit uses of money transfer.
Environmental: The use of blockchain technology in the finance sector could have
positive environmental impacts by reducing paper usage and increasing efficiency. For
example, blockchain-based systems could reduce the need for paper-based documentation,
which could reduce deforestation and other environmental impacts associated with paper
intermediaries, which could lower energy consumption and other environmental impacts
After conducting an industry analysis and literature review on the role of blockchain
traditional methods by offering fast, low-cost, and borderless transactions. The use
transparency, and improve security. It allows for faster and more secure cross-
movement of goods. This can lead to increased efficiency, reduced fraud, and
eliminate the need for traditional financial intermediaries, making the process
finance industry. Its applications in payment systems, banking, trade finance, asset
management, and capital markets are disrupting traditional practices and unlocking
1. Guo, Y., Liang, Blockchain application and outlook in the banking industry. 09
December 2016 (https://jfin-swufe.springeropen.com/articles/10.1186/s40854-016-
0034-9)
content/uploads/2019/08/IMBA-2017-IS-A-PESTLE-Analysis-of-the-Cryptocu
rrency-Industry_compressed.pdf)
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