ABSTRACT

Crypto currency is a powerful technology of exchange transaction information digitally and

clearing payment and credit information in a digital form in banking or any other financial
sector. It then further upgrade and transfer the information without any authority’s
permission. In this study the working and impact of blockchain technology on banks financial
sector and many other organizations have been discussed but as a substitute compete with
banks as businesses, permitting banking transactions to shift out of centralized hierarchical
companies and back into decentralized markets.This paper discusses the impact of
Cryptocurrency and Blockchain technology on the banking and financial industry and discuss
the improvement of the use this technology to minimize risk with its advantages and
disadvantages on banking and financial industry. The research is likewise focusing on
revealing and enhancing boundaries of Blockchain from privateness and security views.
1. INTRODUCTION

The possibility of bitcoin dispatches soon after the financial crisis of 2008. An individual name Satoshi
Nakamoto dispatch the cryptographic money Bitcoin and Blockchain innovation. Monetary emergency of 2008
which influence America as well as the entire world demonstrates to us that the current framework had some
significant defects. The Cryptocurrency and Blockchain innovation is a center, basic innovation with promising
application prospects in the financial business. The financial business requires critical change and is looking for
new development roads. A digital money is a vehicle of trade utilizing cryptographic methods to shield
exchanges and furthermore deal with the arrangement of extra units of the cash. A BlockChain is a broadly
scattered chronicle of information that keeps up a consistently growing register of records completely and
dependably shielded from any change or alteration. The decentralized control of each cryptocurrency works
through distributed ledger technology, typically a blockchain

Blockchain, generally known as the spine innovation behind Bitcoin, is one of the developing advancements at
present in the market pulling in a ton of consideration from ventures, new companies and media. Blockchain can
possibly change different businesses and make forms progressively popularity based, secure, straightforward,
and productive. With high volumes of information getting produced each day inferable from the digitization of
records, it ends up significant for each association to successfully deal with the security dangers and accomplish
huge cost efficiencies. This is the place Blockchain, with its guarantees of decentralized proprietorship,
unchanging nature and cryptographic security of information, is grabbing the eye of the C-suite administrators.
Different use cases are additionally getting investigated crosswise over businesses as everybody has begun
understanding the troublesome capability of this innovation. Blockchain is a conveyed database association that
keeps up a persistently developing rundown of information data which might be affirmed with the aid of the
hubs participating in it. The records is recorded in an open report, which include data of each alternate at any
factor completed. Blockchain is a decentralized arrangement which does now not require any outsider
association in the center. The information about each change at any point finished in Blockchain is shared and
accessible to all hubs. This property makes the framework more truthful than brought together exchanges
including an interloper. also, the hubs in Blockchain are for the most part unknown, which makes it gradually
relaxed for special hubs to verify the exchanges. Bitcoin changed into the main utility that offered Blockchain
innovation. Bitcoin created a decentralized scenario for cryptographic cash, where the participants can buy and
exchange products with computerized coins.Monetary players are the main movers to benefit from this
innovation despite the fact that it is still in an early stage. An investigation by the World Economic Forum
predicts banks and controllers around the globe are ready to try different things with various Blockchain models
in 2017. With 90+ national banks occupied with Blockchain exchange internationally, 2500+ licenses
documented in the course of the most recent three years and 80% of the banks anticipated to start Blockchain
and conveyed record innovation (DLT) extends by 2017, the Blockchain innovation is on its course to turned
into the new ordinary in the realm of monetary administrations. Numerous organizations, from a plenty of
nonfinancial administrations enterprises like telecom Cyber Security, Supply Chain Management, Forecasting,
Insurance Industry, Private transport and Ride Sharing, Cloud Storage, Crowd Funding, Voting, Governance,
Energy Management, Retail, Real domain are headed to build up the potential Blockchain use cases to
emphatically upset their customary plans of action or effectively actualized their pilot Blockchain use cases.
 II. BLOCKCHAIN AND CRYPTOCURRENCY

Money is basically a way of accounting system to record who has what , who owes what to whom and you need
somebody who could stand as the Central issuer, A third party who do all of this work for you . Bitcoin is really
just an accounting system or a way of recording transaction and value and it does it digitally in a peer to peer
network of millions of system. So, anyone can send it to another person directly and everything is recorded in
open ledger. By doing this you do away with need to be in somebody in middle to record all the information.It
automated the function of Third party ,it put in open ledger and anybody can see. Cryptocurrency is a type of
digital currency that uses cryptography for safety and anti-counterfeiting measures. Public and personal keys are
regularly used to switch cryptocurrency between individuals.

Figure 1: Blockchain Technology working

A Blockchain is an advanced, changeless, appropriated record that sequentially records exchanges in close
continuous. The essential for each consequent exchange to be added to the record is the particular agreement of
the system members (called hubs), in this way making a consistent instrument of control with respect to control,
blunders, and information quality. It makes an advanced record of exchanges and in this way permitting to share
it among an appropriated system of PCs and it likewise keeps up a ceaselessly developing rundown of records
called for the most part called "squares" which are verified from altering and amendment. A blockchain usage
involves two sorts of records: squares and exchanges. In each square contains a timestamp and a connection to a
past square is given by the safe hash calculation.
 Near real
time

Smart No
Contract Intermediary

Blockchain

Irreversiblity and Distributed

Immutablity Ledger

Figure2: Blockchain technology

The prime favorable position is that it utilizes cryptography which enables distinctive clients to adjust the
exchanges on a verified system every one getting to their hub of information. On the off chance that most of
hubs concur that the exchange performed looks substantial, recognizing data which coordinates the blockchain's
history and in this manner another square is added to the chain. Blockchain arrangements are isolated relying
upon the sort and size of the system and after that significantly by the utilization instance of a specific
organization. The two sorts of blockchain are open and private. The Ledgers are open if:

1. Anybody can compose information, without consent conceded by another specialist.

2. Anybody can peruse information, without consent conceded by another specialist.

For instance, bitcoin is planned as an 'anybody can-compose' blockchain, where members can add to the record
Without requiring endorsement, there is no better specialist than choose, and it permeates a safeguard
component against assaults. Subsequently, there is an expanded expense and unpredictability in actualizing this
blockchain.

Fig. 3 Flow chart of Blockchain in an IOT application

 Database—Blockchain is “distributed ledger technology” by nature. If there is no need to “distribute”

the ownership of the database, then you should be using a different database structure.
 Data in the Database—Data is the most vital part of any database, but If in your case along with the
data, if the transaction on data is also equally critical, then one should only think of blockchain.
 Transactors—If and only if the data is getting updated frequently by multiple transactors, then look no
further. Blockchain is the right solution.
 Trust—If the various transactors involved do not trust each other yet they need to transact with each
other, then blockchain can use cryptography to solve the problem of trust.
 Central Authority and Cost Effectiveness—If in your solution the central authority that solves the
problem of trust by authentication and authorizing the transaction is expensive in terms of time and
cost, then blockchain can solve that problem in a much more costeffective way. If your solution is
subject to large middleman fees or confirmation time delays, then blockchain is a natural fit to expedite
this process, cutting down on costs for all users
 Security—Security is critical piece in any database. If you are looking for most efficient and secure
way to protect transaction details, then blockchain is the answer.
 Smart Enforcement and Near Real-time Settlement—If you need to enforce certain regulations and
legalities without brokers and middlemen and need real-time settlement without needing a manual
intervention, then blockchain is the right choice.

III. NEED FOR BLOCKCHAIN TECHNOLOGY

The major question that arises is to why use blockchain when already the market has flourishing plethora of
other databases. What substantial importance it holds against the competing products.

The financial crisis of 2008 which started from Wall street which control Trillions of dollars all over the world.
After crisis one of the biggest banks like American Investment Group(AIG) and america’s 4 th largest bank
Lehman Brothers and hundreds of home mortage companies goes bankruptcy. It was the largest bamkruptcy in
US history. It led to a near meltdown on global economy. Then, On 16 September 2008, the US government
bailed out AIG for $85 Billion which come from Fedral Reserve or taxpayer’s money. And just after the crisis
bitcoin and blockchain technology was launched, which give general public control on their hard-earned
money.As it is doesn’t control by central company or person that meant it couldn’t be shut down.It is very easy
to transfer and anonymous. We directly transfer it to anyone and the Bitcoin network perform the functionality
that normally Bank and Paypal do. It puts control on everybody who’s participating in bitcoin system.
Blockchain unlike traditional systems is dynamic enough to become a leader in implementation in a mercurial
market scenario. In a blockchain the supreme advantage it ensures is that each party has a record which is
maintained in a ledger available to each one. It is a ledger widely passed between different users thereby
creating a shared database which is replicated to these users and who can access it only after they have the
access right for it. Consensus, provenance, immutability, finality are the various aspects into which it works,
making sure that all these facets work together into a reasonable amalgamation.

IV. WORKING OF BLOCKCHAIN TECHNOLOGY

Blockchain innovation was first utilized when the Bitcoincryptocurrencywas presented. Right up 'til the
present
time, Bitcoin is as yet the most generally utilized application usingBlockchain innovation. Bitcoin is a
decentralized advanced money installment framework that comprises of an open exchange record called
Blockchain.

The essential component of Bitcoin is the practicality of the estimation of the cash and not using a association or
legislative corporation in fee. the quantity of movements and clients inside the bitcoin arrange is usually
increasing. additionally, the adjustments with standard financial requirements for example KRW, and USD
appear continually in cash alternate markets. The hubs are compensated with the aid of checking the rightness
of exchanges. This method is referred to as mining, and it's miles affirmed with evidence-of-work, that is one of
the essential ideas of Blockchain innovation. at the point when all exchanges are efficaciously affirmed, an
accord exists between every one of the hubs. the brand new squares are related to past squares and each one of
the squares are adjusted in a single ceaseless chain. This chain of squares is the open file system of Bitcoin,
referred to as Blockchain. Blockchain is the decentralized overseeing method of Bitcoin, intended for issuing
and exchanging coins for the clients of the Bitcoin cash. This method can bolster the open record of all Bitcoin
exchanges which have ever been carried out, and not using a manipulate of an intruder association [1]. The solid
motive of Blockchain process, statistics uprightness, is the inducement in the back of why its utilization
stretches out moreover to one of a kind administrations and packages.

V. IMPACT OF BLOCKCHAIN AND CRYPTOCURRENCY ON BANKING SYSTEM

Blockchains are decentralized and permissionless, which can prompt significant disturbances in the money
related division particularly in installment clearing. Since 2015, various real global money related organizations
have started to detail plans for the blockchain division. Goldman Sachs, J.P. Morgan, UBS, and other financial
goliaths have all settled their own blockchain research centers, working in close joint effort with blockchain
stages, and distributed a progression of concentrates on this theme. Goldman Sachs even recorded a patent for
exchange settlement dependent on blockchain innovation. Moreover, different national stock trades, for
example, the Nasdaq Stock Market and the New York Stock Exchange have additionally directed top to bottom
research on blockchain innovation. Blockchain innovation is a sort of fundamental innovation that can associate
with an assortment of situations. It can accomplish resource digitization and point-to-point esteem exchange, in
this manner recreating the money related foundation. This pointedly expands the procedure effectiveness of the
clearing and settlement of monetary resources after exchanges, while lessening costs. Thus, it settle a few
existing issues in the financial business to a vast degree. Obviously, blockchain can turn into the center,
fundamental innovation of the budgetary part later on. At present, various monetary organizations began to test
exchanges on blockchain stages. StandardChartereduses Ripple, a venture level blockchain stage to actualize its
first cross-outskirt exchange. For instance, the stage took 10s to finish a settlement procedure that at present
takes the financial framework and system two days to finish. Blockchain innovation can definitely decrease
manual mediations and utilize shrewd contracts so as to digitize systems that depend intensely on administrative
work. This would significantly improve the effectiveness of inventory network money and lessen manual
operational dangers. With the provider, purchaser, and bank as the primary exchanging parties, and the sharing
of legally binding data on a decentralized circulated record, brilliant contracts can guarantee that installments
are made consequently once a foreordained time and result is come to. The utilization of blockchain innovation
in production network money can help decrease the expenses to banks and exchange financing ventures. As per
counts by McKinsey, blockchain innovation is relied upon to help banks lessen operational expenses by USD
13.5– 15billion every year and cost of hazard by USD 1.1– 1.6 billion every year. Both exchanging gatherings
will likewise have the capacity to decrease their expense of capital by USD 1.1– 1.3 billion every year, and
operational expenses by USD 1.6– 2.1 billion every year. Besides, exchange effectiveness improvement
guarantees a smoother stream of in general exchange financing channels, which enormously increment the
salary of the general exchange chain.

VI. RIPPLE: BANKS AND GOVERNMENTFRIENDLY CRYPTOCURRIENCY

Ripple is a continuous gross settlement framework (RTGS), cash trade and settlement arrange.
Utilizing a typical record that is overseen by a system of autonomously approving servers that always
come close exchange records, Ripple doesn't depend on the vitality and registering serious
verification of-work utilized by Bitcoin. Ripple depends on a mutual open database that utilizes an
agreement procedure between those approving servers to guarantee respectability. Those
approving servers can have a place with anybody, from people to banks. It is the approving servers
and accord component that will in general lead individuals to simply accept that Ripple is a
blockchain-based innovation. While it is agreement situated, Ripple isn't a blockchain. Swell uses a
HashTree to outline the information into solitary esteem that is contrasted over its approving
servers with giving accord.
 RIPPLE

AND IOU

Gateway
Gateway

Currency into ripple currency out of ripple

Fig. 4Ripple Cryptocurrency

The organization was made in 2012 with the point of making instalments quicker, more secure, and progressively
dependable through utilizing blockchain innovation at the present time, worldwide instalments can take a few
days to make and have a staggering expense. Ripple has expressed that their innovation could diminish banks'
working expenses by 33%, and move cash 'in seconds'. Many worldwide banks are now utilizing the Ripple
record to encourage cross-outskirt cash exchange activities .Ever since its beginning, Ripple has been working
closely with some of the biggest mainstream financial companies.One of the major ways that Ripple sets itself
apart from other crypto companies is that, instead of asking questions like ‘how can we overthrow governments
and banks?’ it asks, ‘how can we work together alongside governments and banks?’

CONCLUSION

In the event that Bitcoins and comparative cryptographic forms of money become predominant press of trade,
there will be substantial interruption of the present financial request. Banks will lose their power in the
economy; there will be an expansive trip of capital from the Banking framework. FRB will be in killed. The
Money supply will absolutely be controlled by market powers. This may give scope for control and cartelization
by corrupt components. Cash itself might be hoarded. RSBCs, then again, diminish the job of FRB to a base.
Banks will at present have a job in the economy, yet an alternate one. Banks will be changed into Trusted Fourth
Parties (TFPs) which will have the duty of confirming financial soundness of people and other lawful elements
in a Crypto-money commanded economy. Be that as it may, we should keep improving and exploring different
avenues regarding this innovation