SWOT Analysis of Blockchain

International Journal of Economics and Financial Management (IJEFM)
E-ISSN 2545-5966 P-ISSN 2695-1932 Vol 8. No. 4 2023 www.iiardjournals.org
SWOT Analysis of Blockchain Funding, Platform Finance,

Financial Big Data and Financial Engineering Under the
Background of Financial Innovation and Technology
Efuntade, Alani Olusegun, FCIB, FCA

Federal University Oye-Ekiti, Ekiti State,
Nigeria. Email: [email protected]
Efuntade, Olubunmi Omotayo, PhD

Federal University Oye-Ekiti, Ekiti State,
Nigeria. Email: [email protected]
DOI: 10.56201/ijefm.v8.no4.2023.pg18.38
Abstract
This paper highlighted the Strengths, Weaknesses, Opportunities, and Threats to blockchain
technology in financial services. Blockchain is still an evolving and therefore immature
technology; it is hard to predict how successful it would be outside its only proven use domain of
cryptocurrencies. History teaches us that radically new technologies take many decades to
realize their full potential. Thus it is perfectly possible that blockchain would prove
revolutionary in the years to come despite its patchy success so far. What is certain is that
businesses should be looking at this technology and understanding it because its underlying
ideas are powerful and likely to be influential. Policymakers might support the creation of
teaching materials on blockchain technology. Users might be able to avoid frequent blockchain
frauds, and businesses might find additional capacity to deploy the technology. Policymakers
may use blockchain technology to accomplish their own unique goals. This could help
organisations in public, and private sectors decide whether the technology can help solve
particular issues. Organisations attempting to integrate blockchain technology with their current
systems may find this to be more accessible as a result. Based on blockchain technology, policy-
makers could explain current laws and regulations or create new ones. This paper presents a
comprehensive overview on blockchain technology in the area of Blockchain funding, Platform
finance, financial big data, financial engineering financial technology, Financial innovation,
Digital economy. blockchain; FinTech; payment services; deposits and lending; financial
services; Bitcoin; SWOT Analysis, Ethereum; Hyperledger, smart contract; digital wallet,
Quorum, RippleNet and Stellar Network, Algorand Blockchain and Pundi-X. Blockchain
technology is a mode of decentralization, which is the next key disrupting technology and
worldwide computing paradigm following the mainframe, personal computers and the Internet in
addition to social networking/mobile phones. Blockchain is an insurrection encouraging a new
world without any middlemen. Theoretically, it is an unchallengeable and tamper-proof
distributed ledger of all transactions across a peer-to-peer network. We provide an overview of
IIARD – International Institute of Academic Research and Development Page 18
blockchain architechture.
Keywords: Blockchain funding, Platform finance, financial big data, financial engineering
financial technology, Financial innovation, Digital economy. blockchain; FinTech; payment
services; deposits and lending; financial services; Bitcoin; SWOT Analysis, Ethereum;
Hyperledger, smart contract; digital wallet, Quorum, RippleNet and Stellar Network, Algorand
Blockchain and Pundi-X
Jel Classification: O33, F15
1.0 Introduction to Blockchain

With the continuous development of network technology, more and more people have studied
the blockchain. Sikorski et al. (2017) explored the application of blockchain technology in
relation to the Fourth Industrial Revolution (Industry 4.0); they showed an example of using
blockchain to facilitate machine-to-machine (M2M) interaction and established an M2M
electricity market in China. Blockchain technology is new computer science and technology with
new applications in many fields and has brought changes to society. Blockchain allows the
internet to implement a distributed network state, allowing consensus to be shared between
connected networks (Zhang et al., 2021). The consensus gives the concept of a network of trust
between nodes in a blockchain. Additionally, blockchain is linked to distributed ledger
technology.
A blockchain is a chain consisting of one block after another. Each block stores a certain amount
of information, and they are connected into a chain according to the time sequence of their
generation. chain is kept in all servers, and as long as one server in the entire system can work,
the entire block chain is secure. top-level block structure of the blockchain is a structure designed
to be tamper proof. Blockchain begins with a node’s transaction request, packaged into a block
by encryption, decryption algorithms, and sharing mechanisms, and then broadcasts the block to
other nodes. Nodes are confirmed and validated in the blockchain network.
When the block is successfully verified, the block will be attached to the end of the blockchain of
chain structure; the block cannot be deleted and be tampered. Transaction requests can be stored
at the end of the blockchain, and the transaction can be completed (Zarrin et al.,2021).

Fig. 1. Blockchain Technology Processing Process

Source: Zarrin et al. (2021)
The essence of Blockchain is a distributed accounting verification database, which can be

encrypted by building consensus mechanism (The so-called consensus mechanism is
similar to the establishment and governance mechanism in traditional enterprises) to ensure
its security, and then through the intelligent contract (that is, the contract executed
automatically), the block chain is constructed, so as to effectively solve the trust problem that has
always existed in the Internet.
An asset (value) Internet will be formed through the Internet of Information in combination
with the trust mechanism, which is different from the current mobile Internet. The current
Internet is more like a kind of monetary transaction than a transaction of real assets.
Based on Blockchain technology, assets can be linked and traded instantaneously on the
Internet. Global assets are far larger than the existing capital market, so the promotion of
Blockchain technology will certainly change the existing trading methods and content.
1.1 Blockchain Architecture: Starting point of the blockchain is to maintain trust between
participants that do not trust each other through the blockchain to establish virtual currency. are
three stages in the development of blockchain. In the blockchain 1.0 virtual currency stage, a
large number of virtual currencies represented by Bitcoin entered the capital market. In the stage
of blockchain 2.0 intelligent architecture, intelligent architecture appears on the blockchain, and
many decentralized applications are applied to the market. A sign of maturity is building a
distributed platform. With the continuous deepening of future blockchain technology and
applications, blockchain is the trust stage of blockchain 3.0, such as the Internet of big data,
cloud computing, and so on. Each blockchain development stage has its architecture changed.
For example, in the blockchain 1.0 virtual currency stage, there are basically no concepts such as
smart contracts and DAPPs. It also means that general virtual currencies do not have a Turing-
complete language. In the blockchain trust stage of blockchain 3.0, the general technical
architecture of blockchain has not been fully formed. Technical architecture of the current
blockchain is basically in the blockchain 2.0 smart contract period, and specific types of
blockchains will also have a partial impact on the technical architecture of the blockchain, which
can be generally represented by Figure 1.

1.2 Concept of Financial Technology
Financial technology refers to financial innovations that create new business models,
applications, processes, or products through technology. innovations can have a significant
impact on financial markets, financial institutions, or financial service delivery methods.
Although deregulation and self-regulation can maintain market competitiveness, it is difficult to
cope with the actual financial crisis, and international arbitrage has increased due to deregulation.
financial technology (or Fintech) is defined as the use of technology and software to improve
the processes of financial institutions and to improve the delivery of financial services to end
users (Vives, 2017; Ozili, 2018). CBDC Fintech is any technology-enabled innovation in
financial services that lead to the development of new business models, applications and
processes for the efficient delivery of financial services (Omarova, 2020). Fintech providers
often collaborate with financial institutions subject to regulatory approval while few Fintech
providers provide independent financial services. New Fintech entrants are often regulated
within a regulatory sandbox to promote a level playing field and to enable the development of
Fintech innovations under a supportive regulatory environment (Bromberg et al., 2017).
Rapid advancement of financial technology may provide significant benefits to regulators.
Blockchain technology, as opposed to the old centralized approach, uses cryptography,
distributed consensus, and economic incentives to achieve the benefits of decentralization, non
tampering, data traceability, and programmable smart contracts. We can create a blockchain-
based evidence retention and collection system based on this characteristic of blockchain
technology. Financial supervision not only necessitates a genuine increase in the enthusiasm for
nongovernmental financial industry oversight, but also actively improves the independence of
financial supervision organizations. Goal of effective supervision is to reduce the expense of
supervision while increasing the contribution to social welfare.
Table 1: Financial Technologies in Contemporary World
OPEN Application Programming Interfaces (APIs)
Advanced Analytical /Artificial Intelligence/Machine Learning
Conversation Interfaces (Chatbots, Voice Device Interfaces)
Cloud Processing
Mobility and Wearables
Robotic Process Automation (RPA)
Internet of Things (IoT)
Blockchain
Quantum Computing
Augmented and Virtual Reality
Source: Author, 2023
The use of the Internet, the latest mobile applications, and other smart mobile devices reinforced
the demand (Puschmann, 2017)) for features and services that the finance sector may offer for

effective electronic transaction processes and provisions in financial information systems.

FinTech, the combination of technology and financial services (Trivedi et al., 2021), has become
a well-discussed area of study in the new era of the business industry. FinTech companies offer
many services, such as digital cash, cognitive systems, and distributed ledger technology.
Traditional financial organizations and start-up companies are increasingly partnering with
FinTech (Canaday, 2017) to provide user-friendly and cost-effective financial electronic
services. Blockchain is a common FinTech that transforms how financial businesses operate,
collaborate, and transact with their stakeholders (Creta & Mazaj, 2021). This suggests that the
decentralized financial network is bringing about a major financial sector revolution with the
enhancement of digital wallets as a crucial component of financial inclusion. The decentralized
electronic ledger system will transform the way transactions are carried out, changing the shape
and size of the financial sector.
With technology innovations such as big data, cloud accounting, artificial intelligence, and
blockchain, it has been fully applied to payment and settlement, loan financing, wealth
management, retail banking, insurance, transaction settlement. In the big financial field, the
integration of finance and technology is becoming a new trend in the future development of the
financial industry. We have all heard the jargon of blockchain and cryptocurrencies like bitcoin.
Most of us have a feeling that both are the same. But the fact is that cryptocurrency is an
application of blockchain. Bitcoins use blockchain as the core technology for implementation. In
the blockchain, everything is decentralized; we can also see it as peer-to-peer connections and
transactions stored as blocks.
Bitcoins are cryptocurrencies for making electronic payments without involving banks or real
cash by using virtual wallets. These currencies started to be used in 2009. Tracking of bitcoins is
transparent, as it is a public ledger and uses blocks to store each transaction. These blocks are
connected as a chain with timestamps of transactions. These ledgers are permanent, and no one
can alter them. Not all cryptocurrencies use blockchain for their operations, but blockchain is
ideal for cryptocurrencies.
Finance and technology evolved together for decades (Arneret al.,2022).Startinginthe1950s,
ATMs were introduced to replace human tellers and enabled customer self-service in banking.
Credit and EFTPOS cards eventually aimed to eliminate the need to carry cash, while pervasive
internet connectivity in the late 1990s led to 24/7 online banking, thus rendering visits to
physical branches obsolete for many customers. At the same time, computational risk
management, big data analytics or electronic stock trading were introduced to increase the
effectiveness and efficiency of service operations.
Actual guidelines, however, on how to conduct theoretically, managerially and societally
relevant service research related to Fintech, for example, through systematically identified
research priorities, are unavailable to date. In simple terms, blockchain is a distributed digital
ledger; each transaction in the ledger is cryptographically signed and grouped as a block. When a
new transaction happens, the new block is cryptographically connected to the previous block
after proper validation, and it will be replicated to all nodes within the network. Once the new
block is appended, we cannot modify the previous block. Blockchain is a digital database that
enables simultaneous storage of certain operation records across numerous machines. Digital

data on transactions, contracts, and contact databases are stored using this technology as a series
of interconnected blocks. The absence of transparent and unambiguous financial system
regulations exposes the business to common mistakes and inaccurate information interpretation.
Blockchain technology addresses the majority of these problems and dramatically lowers
financial risk.
The global financial system provides services to billions of people daily while managing trillions
of cash. Such ambitious objectives come with several difficulties that the finance sector has been
coping with for a long time. These issues include the expenditure of having numerous
stakeholders, delays, extra paperwork, and data breaches, resulting in enormous losses the
business endures each year. The issues facing the global financial system may be resolved by
blockchain technology. In addition, the cost of the current stock market is increased by the
presence of organisations like regulators, brokers, and the stock exchange. System effectiveness
can be increased by using a decentralised management strategy for stock exchanges. There is no
need for external regulators because smart contracts can be created on Blockchain. Equity
markets are getting ready to decentralise as a result. Blockchain technology makes it possible to
conduct every type of investor-company interaction securely and without intermediaries,
Fig. 2. Specific and typical services of blockchain in financial sectors.

Source: Javaid et al. (2022).
1.3 Blockchain Technology
Blockchain technology is most simply defined as a decentralized, distributed ledger that
Records the provenance of a digital asset. As a distributed accounting verification database,

the idea of transparency, freedom, equality and win-win makes it become a new technology
that people follow with interest. The Blockchain is a decentralized data structure with internal
consistency maintained through consensus reached by all the users on the current state of the
network. It’s an enabling technology that resolved the byzantine generals’ problem
(message communication between untrusted parties) and opened up a new horizon of
possibilities for trustless transactions and exchange of information. A specific use of
Blockchain like Bitcoin, but rather the fundamental change for the offline world inaugurated by
the Web with easy access to information and the possibility of making digital copies of data or
content with an unprecedented ease for worldwide distribution.
Blockchain Technology has the most important features, such as decentralisation, perseverance,
anonymity and controllability or auditability. Blockchain can operate in a decentralized
environment, which is activated by integrating several basic technologies such as cryptographic
hashing, digital signature (based on asymmetric cryptographic) and the distributed consensus
mechanism. With Blockchain, a transaction can be executed locally. As a result, it can
significantly reduce costs and improve efficiency.
DIGITAL SIGNATURE PEER-TO-PEER(P2P)-(a routing

HASH (Mathematical functions
(Implemented as a public structure for nodes to use the
to assign unique indexes)
cryptographic Key) distributed hash)
CONSENSUS MECHANISM
(Digital procedures that ensure FOUR CORE COMPONENTS OF
the accuracy and consistency THE BLOCKCHAIN
of the stored information TECHNOLOGY
across the participating nodes)
Fig 3: Four Core Components of the Blockchain Technology

Blockchain has been revolutionized in four stages since 2008 (Fig. 3); the first of which is
cryptocurrencies, particularly Bitcoin. The popularity of blockchain has increased because of the
introduction of Bitcoin. The second era introduced monetary transactions and smart contracts in
mortgages, loans, and other monitory bonds, an automated computer program that executes
automatically. In the third era, it has increased in digital society by enhancing the features of
smart contracts. The fourth era concerns industrial decentralized ledger systems in different

industries such as government, healthcare, supply management, education, energy, and finance.
Blockchain technology has advanced from being a platform for digital currencies to smart
contracts to decentralized applications (DApp) with high-speed and expandable decentralized
storage and decentralized communication to the infrastructure available for Industry
development.
Analogous to how the digital wave disrupted the telecommunication industry, Blockchain
Technology is emerging as a FinTech paradigm shift. The author promises to enhance the
efficiency of financial transactions and to transform the global financial network altogether.
Leaders of the financial industry expect the technology to disrupt the sector. A 2016 survey
conducted by McKinsey unveils that approximately 50 percent of the executives in the financial
industry are confident that Blockchain Technology will have a significant impact within three
years. IBM pronounced that 66 percent of banks will have a scalable Blockchain-based
deployment by the year 2020 (Liang, 2016).
Blockchain technology has emerged as a revolutionary and disruptive innovation in both
technology and economics in the fnance industry and requires a critical level of data integrity.
The main objectives are to replace the existing process by eliminating the need for the “trusted
third parties.” Undoubtedly, in the fnance sector, the global money remittance and automated
banking industry will be disrupted by blockchain transformation.
Digital Currency Digital Finance

Digital Society
(Bitcoin and Crypto (Ethereum and
(Decentralised Apps)
currency) Smart Contracts)
Digital Industrial
BLOCKCHAIN
(Public Ledger and
TECHNOLOGY IN
Realtime distributed
FINANCIAL SECTOR
database)
Fig 4: Blockchain evolution in Financial Industry

1.31 Private Blockchain
The private Blockchain is where a central authority manages the rights to access or modify the

database (PwC, 2017). It is valuable for enterprises who want to collaborate and share data, but
don’t want their sensitive business data visible on a public Blockchain.
1.32 Public Blockchain
In a public Blockchain, all participants are able to access the database, store a copy, and modify
it by making available their computing power. Bitcoin, for example, is a public Blockchain
(PwC, Blockchain, a catalyst for new approaches in insurance, 2017)
1.33 Consortium Blockchain
“The consortium Blockchain is open to the public but not all data is available to all participants.
The main difference between them is that Consortium Blockchain is governed by a group rather
than a single entity”.
1.4 International Transactions
Ethereum makes sending money internationally as easy as sending email. It has been developed
to conduct international transactions in a secured way. A user can send or receive
payments through a wallet. Once the recipient enters the account address from the
Ethereum Name Service (ENS) or his/her wallet, the specified amount can be immediately
transferred to his/her account.
1.41 Smart Contract
A smart contract is an innovative way to trigger a “contract” program where the deposited
cryptocurrency is transferred when a predetermined condition or set of conditions is met. Smart
contracts are contractual clauses that have been converted into lines of code that can be run on
top of a blockchain. The purpose is to embed the contractual clauses into a blockchain such that
they can be enforced automatically. Smart contracts reduce the risk of contract violation,
decrease cost and increase trading efficiency. Smart contracts adhere to the immutability of the
blockchain, meaning that they cannot be altered once issued. Behaviors that violate the contract,
such as financial fraud, can be avoided in some cases. The elimination of a third party allows an
automatic settlement of financial transactions, improving businesses’ efficiency in addition to
reducing turnaround time and removing the need for reconciliation between parties (i.e., cross-
border banks) that speed up transactions and the settlement of trades for FinTech companies.
1.42 Quorum
Quorum is a permissioned version of the Ethereum blockchain. It was developed by JP Morgan
and was later acquired by ConsenSys. Since it is a permissioned blockchain, nodes must be
verified before entering the Quorum network. The consensus algorithms used by Quorum are
RAFT and IBFT in place of the PoW implementation of Ethereum 1.0 and Bitcoin. Privacy is
preserved in Quorum as transactions are not visible to members of the larger network. This is
similar to Hyperledger’s channels, where some transactions can only be visible to a smaller
group of network nodes maintained on a smaller, private ledger. Quorum is referred to as a free
gas network, meaning that there is no “mining fee” for transactions, and there are no
cryptocurrency costs associated with its transactions (i.e., Gas is set to zero).

1.43 Digital Wallets

Digital wallets are financial applications that allow users to store public and private keys for
their cryptocurrency transactions. Based on internet connectivity, blockchain-based wallets
can be categorized into cold and hot wallets. A hot wallet is always connected to the internet and
cryptocurrency network. It is used for day-to-day transactions. Cold wallets are called “vaults.”
They are not connected to the internet and allow users to store cryptocurrencies with a higher
level of security. Cold wallets are less convenient for active traders as they have to move the
amount of cryptocurrency to a hot wallet or power on cold wallets and connect them to the
internet to carry out transactions.
1.5 Blockchain Platforms Adopted in Financial Services
FinTech companies are shifting towards blockchain-based financial services for security,
scalability, and efficiency compared with traditional financial services.
1.51 RippleNet
RippleNet is a network of financial entities such as banks, payment providers, and other financial
institutions. RippleNet routes payments among the financial institutions on their network to settle
transactions. The network itself is a decentralized global network that uses a Ripple-developed
consensus protocol to validate account balances and transactions within the network. The
network keeps track of all the transactions that occur and are publicly recorded and viewable.
RippleNet uses Ripple Cryptocurrency, XRP. By having banks and payment providers within the
network, Ripple removes the fragmentation within the payments processing landscape.
Fragmentation results from the lack of interconnection between multiple securities markets. It
can reduce the effectiveness of mass marketing techniques, erode brand loyalty, and result in
customer orders being directed to markets that do not necessarily offer the best price
(Renduchintala et al., 2022).
Ripple’s solutions have opened up many services for small-to-medium banks and merchants,
especially in countries with little financial infrastructure. RippleNet’s integration allows small
banks and merchants to complete transactions. Access to the network allows these previously
challenged companies to complete cross-border transactions and allow different payment
services locally. It also allows Ripple’s financial partners to reach many customers that they
would not have been able to reach before due to the lack of infrastructure.
1.52 Stellar Network
The Stellar Network is a peer-to-peer payments network that originates from the early
iterations of the XRP Ledger developed by Ripple. Stellar’s consensus protocol (SCP) utilizes
smart contracts to carry out transactions. It uses the Quorum blockchain to emphasize
security and speed up transactions within the network by utilizing the slices. A Quorum slice
is a subset of nodes on the network that a given node chooses to trust and depend on.
Stellar allows each node to choose what node is within its “trusted zone” (slice), enabling open
participation and more jurisdiction over who is validating the transactions, leveraging the trust
built through interpersonal interactions. Interpersonal interaction is the communication that

occurs between interdependent nodes that have some knowledge of each other. However, to
reach a global consensus, there have to be intersections between Quorums—meaning that one
node in the Quorum slice must also be in another Quorum slice to maintain the integrity of the
network. This
allows the network to reach a consensus without relying on a centralized/closed system.
1.53 Algorand Blockchain
The Algorand blockchain is a payment solution with its point-of-sale implementation. Their
application acts as a point of sale and communicates with a crypto wallet containing its currency
(‘Algo’) through a transaction gateway. The Algorand process starts with an application that
captures the transaction details and creates an unsigned transaction that is then sent to the
transaction gateway. The transaction gateway forwards it to the wallet. The signing wallet
receives the unsigned transaction and waits for approval from the consumer. The transaction gets
signed and returned to the gateway if the consumer approves it.
The entire receipt is stored in an off-chain storage system—essentially recording the transaction
in an immutable manner so it can be retrieved when needed. The storage system eliminates the
need for data to be managed by the point of sale system/application as it is stored on an off-
chain system. That way, all the data can be managed and retrieved at any time. The Algorand
blockchain uses a pure PoS consensus algorithm that requires minimal computation.
1.54 Pundi-X
Pundi-X is an end-to-end platform that allows consumers to use cryptocurrency at retail points of
sale. Consumers must have a mobile wallet to use the platform. The mobile wallet maintains the
public key encryption behind a standard password-based system to be user-friendly.
The platform also allows for “physical” smart card information to be loaded by the mobile app
and allows the currency to be used even without access to a smartphone. Although Visa and
Mastercard have networks that enable using cryptocurrency as payment through conversion to a
fiat currency, the issue is that not all locations worldwide have access to these services. Pundi-X
targets under-serviced countries where it allows merchants and users to begin to transact
more digitally. Pundi-X is currently marketing in Indonesia, giving a hardware device to
merchants in retail environments when a smartphone is available. Merchants can carry out their
transactions on a smartphone-based application as well.
1.6 International Money Transfer (Remittance)
Blockchain has revolutionized cross-border payments. Several companies (such as Ripple,
Everex, SureRemit, etc.) have capitalized on using blockchain for remittance. This subsection
discusses the current issues faced by the remittance international money transfer segment
and reviews how Everex and SureRemit solve these issues. Currently, the remittance market is
dominated by the Society of Worldwide Interbank Financial Telecommunication (SWIFT).
SWIFT is a network of banks that connects all corners of the world. For a transaction to be
completed, the transaction must go through a clearing or settlement center before the transaction
is cleared. SWIFT itself does not settle the transaction. It simply confirms the consumer’s
transaction request. It is up to the banks to settle the transaction and relay the confirmation back
to SWIFT so both sides can acknowledge the transaction’s completion. For a cross-border
transaction to be executed, it has to pass through several banks because not all banks operate
with a large variety of fiat currencies in other countries. Thus, a route between banks must be
established to allow currencies to be exchanged into the desired receiving currency
(Renduchintala et al., 2022).
1.7 Deposits and Lending
Deposits and Lending is a segment of the FinTech industry that relies on companies enabling
people to obtain loans and monitor and collect information about their credit. This section
focuses primarily on the Lending aspect of this segment as it has the largest application within
the blockchain and provides an overview of Colendi, Figure, and Celsius Fintech companies.
Blockchain can speed up verification processes by simplifying and breaking down barriers to
obtaining a loan and even allowing other people to lend money without the risk of not knowing
who they are lending to. Businesses and consumers can use blockchain-aided platforms to
initiate transactions and loans guaranteed through the ledger’s transparency and immutability.
1.8 Bitcoin
Bitcoin introduced the concept of blockchain to the world. It was created by Satoshi Nakamoto.
It has been popular since its introduction and has enlightened many derivatives worldwide. It is
a permissionless public ledger record, meaning that the ledger of all Bitcoin transactions is
accessible publicly and distributed to nodes worldwide. Since its creation in 2008, many have
argued that Bitcoin should be seen as a speculative commodity rather than just a cryptocurrency
(Renduchintala et al.,2022).
The symbols used for bitcoin are BTC or XBT. BTC is short for Bitcoin. These abbreviations
come from the International Standards Organization (ISO), which maintains a list of
internationally recognized currencies. The “X” indicates that the currency is not associated with
a particular country. Many FinTech applications are built on the Bitcoin distributed ledger,
where the transaction records can be easily verified.
1.9 Ethereum
Ethereum was created as an alternative protocol to Bitcoin and allows for building decentralized
applications, writing smart contracts, and managing digital assets. Ethereum is a
permissionless, open-source blockchain platform. Its smart contract implementation and
development kits are the most popular blockchain platform for decentralized applications
(Renduchintala, et al., 2022).
Ethereum has a native digital currency called Ether (ETH) that has three primary purposes: to
settle transactions through the exchange of ETH and enable network operations by using ETHas
currency to pay transaction fees and store value. Ethereum has the largest enterprise ecosystem
in the world, with an active technical community of over 300,000 developers and infrastructure
experts coordinated by the Enterprise Ethereum Alliance (EEA), which is dedicated to
promoting Ethereum adoption and comprises the world’s largest companies such as Microsoft,

JP Morgan, Accenture, ING, Intel, and Cisco.

1.10 Fund Aggregation
A regular investor needs an orderly platform to manage all of his transactions, loans, and
investments. On Ethereum, there are a variety of solutions that can manage all DeFi
activities. Developers can create user interfaces that allow investors to use all the services
offered by DeFi's open architecture.
1.11 Digital Money
A standard feature of the token is that it can make it possible to combine financial institution
services with the security and governance of Bitcoin. As a result, Ethereum can permit a
variety of operations that are not possible with Bitcoin, such as investing in index funds,
borrowing and lending money, scheduling payments, and more.
1.14 Faster Payments
Blockchain can offer instant payments at minimal bank fees, thanks to the functionality of the
decentralized ledger. Blockchain is faster and more secure than any traditional mode of
completing transactions. By doing so, the bank will be able to eliminate middlemen, thereby
creating a situation for both the customers and the bank to perform more transactions in a given
time-frame. By creating a decentralized payment channel, banking institutions can compete
with cutting-edge fintech firms, introduce innovative products, and raise their service
standards, while simplifying and reducing the cost of administrative processes.
1.15 Withdrawal and Settlement
Before a direct bank transfer reaches its intended recipient, it passes through a complex network
of intermediaries, including custodial services. Additionally, bank balances are verified by the
entire global financial system, which includes a vast network of traders, asset managers
and other financial professionals.
Consider a scenario in which a customer wants to transfer money from a bank account in the US
to an account in India. This transfer is possible only through the Society for World-wide
Interbank Financial Telecommunications (SWIFT). Every day, SWIFT employees make about
a quarter of a billion communications to some 10,000 odd companies. Only payment
orders are handled by the central SWIFT protocol. The actual money is exchanged through a
network of intermediaries, and each of them is compensated on a proportionate basis. This leads
to huge expenses on the customer and undue delay in the processes.
1.16 Portfolio Management
On Ethereum, there are a variety of fund management products aimed at expanding the
portfolio according to the client's own plan. These products are accessible to all, and
operate automatically using innovative technology. There is no opportunity for the human
manager to make a dent in the customer's earnings. At the same time, the investor is
never required to operate a separate portfolio as he can withdraw money from the fund at

any time.
1.17 Quadratic Funding
For quadratic funding, Ethereum has established a state-of-the-art model of fundraising.
According to the laws of quadratic financing, the initiatives that most benefit the lives of the
most people are those that have the most concentrated demand. This could increase the
distribution of wealth for a variety of public goods in the future.
A quadrature fund is a collection of gifts from which to create a round of public funding.
Interested people can increase the demand for a particular project by making financial
contributions. When the round is complete, funds from the matching pool are divided
among projects with the most specific needs taking the lion's share.
2.0 SWOT Analysis of Blockchain Finance and Technology
2.1 Strengths
Blockchain has shown its potential in industry and academia. We discuss possible future
directions with respect to four areas: blockchain testing, stop the tendency to centralization, big
data analytics and blockchain application. Blockchain can provide hedge fund investors and
strategists with more participation options. Hedge funds minimize risk while maximizing
returns for investors. In this wake, impact investment is also soon going to leverage
blockchain technology. Impact tokens can be rewarded for specific actions and linked to smart
contracts.
As the blockchain uses only an appending ledger format, therefore easily tracks the entire
transactions, and cannot be modifed like traditional databases. Blocks in the blockchain are
cryptographically secured; this ensures that the blockchain data cannot be tampered with. Since
the ledger is shared with all nodes within the network, it ensures transparency, and it avoids a
single point of failure. Blockchain technology works without intermediates; therefore, the
transaction happens fast without charge or with a very nominal charge.
2.11 Digital Identities
Financial institutions, in order to comply with ‘know-your-customer’ obligations and 'beneficial
ownership' requirements, verify numerous data points about every potential corporate and
individual customer. To reduce the massive duplication inherent in existing KYC checks, banks
and other traditional service providers are looking to become ‘KYC bureaus’, with DLT
potentially standing in as the cross-institution source of proof. According to the World Bank,
more than 1.1 billion people around the world still cannot claim their identity. At the same time,
companies and financial institutions in both tradition and digital market need to follow strong
Customer Knowledge Initiative (KYC).
2.12 Smart contracts
In addition to keeping a ledger of ongoing currency transfers, Blockchain can also reliably
record other types of time-sequenced data, including processing the steps required to execute
programs known as ‘smart contracts’. Smart contracts digitally facilitate and enforce the

transfer of digital assets according to software defined contract conditions (Michael Casey,
2018). The example of the insurance industry is full of costly mistakes and mistakes. In USA, the
FBI estimates that more than $ 40 billion per year is lost as a result of fraud across all non-health
insurance industries.
2.13 Distributed ledger Technology (DLT)
The term DLT also enters the discussion whenever we discuss blockchain. We consider
blockchain also as a peer-to-peer distributed architecture. DLT is old technology, and blockchain
uses its concepts in implementation. Blockchain is not DLT alone but has many more features.
DLTs and cryptocurrency were first suggested for the financial sector, including banks.
Conversely, it was quickly discovered that DLTs are not restricted to trading in virtual currencies
or goods but could be used to swap digital assets. The idea is that DLT encourages network users
to pass and update information or documents, and that this is done in a trusted environment.
2.14 Blockchain testing
Recently different kinds of blockchains appear and over 700 cryptocurrencies are listed in the
world up to now. However, some developers might falsify their blockchain performance to
attract investors driven by the huge profit. Besides that, when users want to combine blockchain
into business, they have to know which blockchain fits their requirements. So blockchain testing
mechanism needs to be in place to test different blockchains.
Blockchain testing could be separated into two phases: standardization phase and testing phase.
In standardization phase, all criteria have to be made and agreed. When a blockchain is born, it
could be tested with the agreed criteria to valid if the blockchain works fine as developers claim.
As for testing phase, blockchain testing needs to be performed with different criteria. For
example, an user who is in charge of online retail business cares about the throughput of the
blockchain, so the examination needs to test the average time from a user send a transaction to
the transaction is packed into the blockchain, capacity for a blockchain block and etc.
2.15 Stop the tendency to centralization
Blockchain is designed as a decentralized system. However,there is a trend that miners are
centralized in the mining pool. Up to now, the top 5 mining pools together owns larger than51%
of the total hash power in the Bitcoin network. Apart from that, selfish mining strategy [10]
showed that pools with over 25% of total computing power could get more revenuethan fair
share. Rational miners would be attracted into the selfish pool and finally the pool could easily
exceed 51% of the total power. As the blockchain is not intended to serve a few organizations,
some methods should be proposed to solve this problem.
2.16 Big data analytics
Blockchain could be well combined with big data. Here we roughly categorized the combination
into two types: data management and data analytics. As for data management, blockchain
could be used to store important data as it is distributed and secure. Blockchain could also ensure
the data is original. For example, if blockchain is used to store patients health information, the
information could not be tampered and it is hard to stole those private information. When it

comes to data analytics, transactions on blockchain could be used for big data analytics. For
example, user trading patterns might be extracted. Users can predict their potential partners’
trading behaviours with the analysis.
2.17 Accountability
The main advantage of blockchain is that it can track and verify trades, allowing people and
businesses to transact without the help of a third party or centralized entity. Blockchain
can make bank transactions more robust by authenticating each transaction. By providing
equal rights to all participants in the transaction chain, blockchain establishes a shared
infrastructure rather than placing everything under the jurisdiction of a central authority. Users
can be assured that the transactions will be done in compliance with the protocols and there is no
possibility of counterparty risk. Banks can provide auditors and government officials with
access to their procedures via a blockchain ledger, enabling banks and auditors to avert
suspicious transaction activity and speed up the auditing process.
2.18 Enhanced Security
Banks can use distributed ledgers to carry out quick and secure transactions. A
combination of distinct digital signatures, including a public key and a private key that are
subject to strict cryptographic controls, can be used to protect each transaction. Every user has
access to a public key, while parties to a specific transaction share a private key. Data cannot be
modified after it has been entered in a block. Thus, blockchain is inherently safe as it is
shared by a lot of people, making hacking impossible. Blockchain lowers the risk of fraud by
utilizing transactional value exchanges that rely on both public and private decryption codes.
2.2 Weaknesses
Privacy Leakage: Blockchain can preserve a certain amount of privacy through the public key
and private key. Users transact with their private key and public key without any real identity
exposure. Blockchain cannot guarantee the transactional privacy since the values of all
transactions and balances for each public key are publicly visible.
2.3 Opportunities
Blockchain-based systems enable the faster, more cost-effective, and more customised issuance
of digital securities. With its adoption, the market for investors can be expanded, costs for issuers
can be reduced, and counterparty risk can be reduced due to the ability to customise digital
financial instruments to the demands of investors. It uses mutualised standards, protocols, and
shared procedures to give network users a single common source of truth. Participants in the
business network can now more easily collaborate, manage data, and agree with this
technology’s application.
Blockchain can facilitate the direct settlement of financial transactions and better retention
of their history than existing methods such as SWIFT. Because bank transfers follow
processes embedded in our financial system, they often take a few days to settle, whereas
distributed ledger technology can enable real-time transactions between financial institutions,
and thus speed-up the withdrawal and settlement processes.

2.31 Loans and Credits

Banks typically rely on credit reporting systems to evaluate loan applications. However, using a
blockchain network with peer-to-peer lending capabilities can streamline the lending process
and increase security for syndicated loans or mortgages. Traditional risk assessment methods,
such as credit scores and debt-to-income ratios provided by credit agencies, can be
vulnerable to harm for both banks and consumers. Blockchain technology offers a more secure,
efficient, and cost-effective alternative for handling loan applications.
2.32 Transfer of Assets
Capital markets can be made more efficient by blockchain. Placing securities such as stocks,
bonds and alternative assets on a public blockchain can reduce the volatility of the current
securities market. Often assets such as stocks, commodities or debt are bought and sold based on
what the seller has and what the buyer needs. In doing this a complex network of brokers,
exchanges, clearing houses, custodian banks and central security depositories help financial
markets.
2.33 Identity Authentication
Identity verification is a prerequisite for every online financial transaction. However,
customers do not appreciate certain steps in the verification process, such as face-to-face or
Know Your Customer (KYC) verification by being physically present before a financial
organization, password-based authentication for online services, etc. Since it is a precondition
for every new service provider to complete all these tasks for security reasons, consumers and
businesses can benefit from accelerated verification processes with blockchain.
2.34 Peer-to-Peer Transfer
Customers can use peer-to-peer (P2P) transfers to send money online from their bank
accounts or credit cards. Although there are many P2P transfer software in the market, there
are some restrictions associated with each one. Some apps allow financial trans-actions within
a specific geographic region only, while there are others that do not allow money
transfers if both parties are in the same country. With blockchain enabled decentralized
apps, P2P transfers can be facilitated anywhere and anytime. Blockchain allows global
P2P transfers as there are no geographic precincts. Transactions can be instant and incur no fees.
Blockchain applications use two types of security keys: private and public keys. All network
users have access to the public key, but only the participants in a transaction can access the
private key. As a result, users inside a network can see the transaction, while participants can
only access the transaction’s specifics. Blockchain can preserve financial system transparency
while safeguarding the private financial data of transaction stakeholders. Nearly every industry
in the world could experience a fundamental shift in how business is conducted due to
blockchain technology. As the technology and its use cases develop and advance, Blockchain
enables businesses to create better transparency, traceability, and operational efficiency for
various business transactions and contracts. Financial institutions are looking at ways to use
Blockchain to its full potential, including identifying product opportunities, resolving regulatory

issues, and overcoming challenges in recognising/assessing risks and corresponding controls.
2.4 Threats
There are difficulties in putting blockchain technology into practice. Despite various challenges,
it can be used by hundreds of financial institutions, and blockchain stocks are accepted forms of
investment. It is evident that the financial sector is aware of the potential advantages of
Blockchain and that it will play a more significant role in financial services in the future.
Blockchain technology uses a decentralized ledger and is a form of distributed ledger technology
that is secured with public and private security keys. The public key is available to all network
users, and the transaction’s stakeholders access the private key. As a result, the stakeholders and
transaction details will only be visible to those who possess the private key, while the transaction
will be visible to all network users with the help of the public key. It will guarantee system
transparency while safeguarding the private financial data of the stakeholders.
Violation of privacy cannot be ruled-out on blockchain: The holder of the cryptocurrency
can be tracked using the public key associated with his or her payment. A behavior map can be
accessed and constructed using software tools based on the data collected through public
keys, your buying habits, spending power and transaction volume.
Privacy (absence of identity) can fuel the growth of illegal activities such as drug trafficking,
financial terrorism, and money laundering. In wake of cyber-attacks, investors may be at risk of
significant financial loss if they lose their cryptographic keys because, in most situations, the
attack is immediate and irreversible. According to Irwin and Turner (2018), procedures ought to
be regulated to prevent fraud and money laundering.
Switching to blockchain technology can be expensive and time-consuming, especially given the
scarcity of qualified blockchain developers. Smaller financial companies, in particular, could be
reluctant to invest in modernising their current systems. Data on a blockchain cannot be altered.
Although this is a benefit of employing Blockchain, financial companies that regularly need to
change stored data may find it problematic. To implement Blockchain, companies would need to
alter their current procedures. Both the development of blockchain technology and its use in the
financial services sector are still in their infancy. The two most crucial blockchain innovations to
keep an eye out for are our transaction processing and interoperability advancements, as both
will increase the technology’s utility for financial institutions. It is doubtful that blockchains will
replace current financial systems in the foreseeable future. Instead, financial institutions will test
out Blockchain to gauge its potential before implementing it gradually as an addition to their
current systems.
The development of Blockchain is still in its early phases. It has several difficulties due to
continuing changes. On the Blockchain, data updates are not authorised. Information from other
blockchains cannot be exchanged or used by one Blockchain. They are unable to converse with
one another as a result. Interoperability solutions must be prioritised in blockchain networks. It is
expensive and time-consuming to make the switch to blockchain technology. This is true because
there are not many skilled blockchain engineers. Smaller financial institutions can therefore be

reluctant to make investments in addition to current system changes. These include the potential
for technology to be used to facilitate illicit behaviour, hazards to users, and the financial system
brought on by the current dearth of consumer protections. Blockchain may not adequately handle
most of the significant issues related to each application. and utilise a car while finding solutions
to issues like electromobility.
3.0 Development and Supervision of Financial Technology Based on Blockchain
Decentralization, stability, security, and immutability are all features of blockchain technology.
Blockchain, as the underlying technology of Bitcoin’s digital monetary system, is currently
sweeping the globe. Blockchain is a revolutionary decentralized database technology that
employs encryption, a timestamp chain data structure, a distributed consensus mechanism, and
other technologies to achieve decentralization, tamper resistance, easy tracking, and
programmable smart contracts. In the face of rising financial technology, we must maintain
inclusive, technological, and invasive regulatory principles that not only foster financial
innovation, but also conduct dynamic supervision to avoid systemic financial hazards.
4.0 Conclusion and Recommendation

This paper highlighted the Strengths, Weaknesses, Opportunities, and Threats to blockchain
technology in financial services. Blockchain is still an evolving and therefore immature
technology; it is hard to predict how successful it would be outside its only proven use domain of
cryptocurrencies. History teaches us that radically new technologies take many decades to realize
their full potential. Thus it is perfectly possible that blockchain would prove revolutionary
in the years to come despite its patchy success so far. What is certain is that businesses
should be looking at this technology and understanding it because its underlying ideas are
powerful and likely to be influential.
Policymakers might support the creation of teaching materials on blockchain technology. Users
might be able to avoid frequent blockchain frauds, and businesses might find additional capacity
to deploy the technology. Policymakers may use blockchain technology to accomplish their own
unique goals. This could help organisations in public, and private sectors decide whether the
technology can help solve particular issues. Organisations attempting to integrate blockchain
technology with their current systems may find this to be more accessible as a result. Based on
blockchain technology, policy-makers could explain current laws and regulations or create new
ones. This paper presents a comprehensive overview on blockchain technology in the area of
Blockchain funding, Platform finance, financial big data, financial engineering financial
technology, Financial innovation, Digital economy. blockchain; FinTech; payment services;
deposits and lending; financial services; bitcoin; SWOT Analysis, Ethereum; Hyperledger, smart
contract; digital wallet, Quorum, RippleNet and Stellar Network, Algorand Blockchain Pundi-X.
Blockchain technology is a mode of decentralization, which is the next key disrupting
technology and worldwide computing paradigm following the mainframe, personal computers
and the Internet in addition to social networking/mobile phones. Blockchain is an insurrection
encouraging a new world without any middlemen. Theoretically, it is an unchallengeable and

tamper-proof distributed ledger of all transactions across a peer-to-peer network. We provide an

overview of blockchain architechture
Blockchain technology plays a vital role in the financial sector as it ultimately lifts trust and the
need for third-party verification by using consensus-based verification. This survey provides a
comprehensive summary of the most relevant blockchain-based FinTech implementations and an
overview of FinTech sectors and segments. Financial service providers find blockchain
technology useful to enhance authenticity, security, and risk management. Several institutions
are adopting blockchain in trade and finance systems to build smart contracts between
participants, improve efficiency and transparency, and open up newer revenue opportunities.
Blockchain’s unique recording capabilities make the existing clearing and settlement process
redundant. Banks and other financial entities are adopting blockchain-enabled IDs to identify
people. Better results come from organisations’ capacity to foresee emerging trends in financial
blockchain applications and develop blockchain functionality. The transfer of asset ownership
and addressing the maintenance of a precise financial ledger. Measurement, communication, and
analysis of financial information are three significant areas to be focused on by accounting
professionals. Blockchain clarifies asset ownership and the existence of obligations for
accountants, and it has the potential to improve productivity. This paper identifies and studies
relevant articles related to blockchain for finance. This paper focuses on Blockchain technology
and its importance for financial services. Further takes up various tools, strategies, and featured
services in Blockchain-based financial services (Krylov & Seleznev, 2019).
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International Journal of Economics and Financial Management (IJEFM)

E-ISSN 2545-5966 P-ISSN 2695-1932 Vol 8. No. 4 2023 www.iiardjournals.org

SWOT Analysis of Blockchain Funding, Platform Finance,

Efuntade, Alani Olusegun, FCIB, FCA

Efuntade, Olubunmi Omotayo, PhD

1.0 Introduction to Blockchain

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Fig. 1. Blockchain Technology Processing Process

The essence of Blockchain is a distributed accounting verification database, which can be

can be generally represented by Figure 1.

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effective electronic transaction processes and provisions in financial information systems.

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Fig. 2. Specific and typical services of blockchain in financial sectors.

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DIGITAL SIGNATURE PEER-TO-PEER(P2P)-(a routing

Fig 3: Four Core Components of the Blockchain Technology

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Digital Currency Digital Finance

Fig 4: Blockchain evolution in Financial Industry

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1.43 Digital Wallets

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JP Morgan, Accenture, ING, Intel, and Cisco.

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2.31 Loans and Credits

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issues, and overcoming challenges in recognising/assessing risks and corresponding controls.

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4.0 Conclusion and Recommendation

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tamper-proof distributed ledger of all transactions across a peer-to-peer network. We provide an

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