Is the finance sector ready for change and the shift in gears given by technologies that are advanced? As the next-generation AI technology, generative AI that is integrated with a blockchain platform is expected to completely change the financial scene by providing more efficient and more transparent solutions and services. 

Therefore impact of blockchain in these sectors is something worth having conversations about.

It is discussed at length in the GSDC Community Research Report and depicts a future where innovation is the jabberwocky that changes the fundamental contours of finance.

The current form of generative AI – an approach that can itself generate new content, models, or solutions – enables myriad intelligent automation and optimization scenarios for management decision-making and product/service advancement to meet end consumers’ needs. 

This type of artificial intelligence can intermediate knowledge, generate new outputs and decisions from data and patterns, provide solutions to existing problems, and help financial organizations stick to the highest standard and meet the current and future demands in the market.

On the other hand, blockchain with its decentralized and open environment of the transactional 

process provides a robust and unalterable method of recording and authenticating a transaction. 

Due to its decentralized, secure, and transparent nature, blockchain can help in the effective running of operations through the reduction of the risks of fraud and the elimination of the need for third-party facilitation in the financial ecosystem.

Impact of Blockchain in 2024:

The Decentralized Finance (DeFi) Revolution

Currently, Decentralized finance (DeFi) is increasingly becoming popular and this research explores the growth rates of the complex phenomena. 

The impact of blockchain in the world of Finance has been a topic for a while and the following research will show why.

As for Defi protocols, the increasingly popular total value locked (TVL) figure reached more than $200 billion in 2022, having grown from $1 billion in 2020, as noted by TechTarget. 

The upward trend evident in the figure paints the picture of increasing confidence in the decentralization of financial systems through the blockchain.

DeFi protocols capture functionality based on decentralized platforms such as Ethereum, where individuals directly engage in financial transactions while bypassing middlemen such as banks. 

These protocols are interested in offering several services beginning from lending and borrowing, trading services, and yield farming services in an environment that is entirely decentralized and transparent. 

With the help of generative AI, the DeFi platforms will be oriented and accomplish the subsequent objectives. 

To improve the value propositions of DeFi platforms, such new tools will offer custom-made financial services for users, better ways of carrying out liquidity and risk management, and many others.

Unleashing the Power of Investor Confidence

The profile also provides information on the increase in the use of venture capital funds in blockchain/cryptocurrency companies. 

According to the study, venture capital financiers invested more than $30B in such innovative companies in 2021, up from a paltry $10B in the previous year. 

This hefty amount of investment only underlines the vested belief in the prospects of the industry as well as in the efficiency of using blockchain technologies.

The tremendous interest in funding emerging blockchain businesses demonstrates that executives are beginning to acknowledge the impact of blockchain is evident and not just in finance but many more fields, hence blockchain has also been called the invention of the century. 

The up-and-coming companies would continue to create more unique innovations and applications on the blockchain platform, therefore, meaning that more investors would come in to invest in them hence boosting the uptake of the blockchain platform.

Addressing the Global Trade Finance Gap

One of the most attractive use cases for blockchain is bridging the trade finance deficit. The Economic Times suggests that this figure, referred to as an ‘organic need’ or ‘trade finance demand deficit,’ was an astounding $1.7 trillion in 2020. 

This is where blockchain comes into the picture since it can effectively and efficiently cope with such tasks, making trade finance more transparent, as well as providing access to it for those who previously did not have it.

The traditional flows involved in the trade finance system are however very cumbersome and convoluted with many players vast quantities of paperwork and elongated approval times. 

Conventional paperwork and record-keeping can be replaced by blockchain, owing to its tendency to create a single source of truth, thereby minimizing errors, making transactions transparent, and encouraging faster completion of such transactions. 

Economic Impact and Growth Potential

While most have heard of the blockchain; primarily in the way it has revolutionized the finance industry, that’s not where it ends. According to the estimation of PwC, blockchain technology has great potential to contribute to the GDP of the world by an incredible $1.76 trillion by 2030. 

While most industries will be affected to some extent due to the advent of blockchain, three industry segments, namely financial services, manufacturing, and retail, will witness the greatest disruption in supply chains, transactions, and records management.

Blockchain technology offers the potential to establish smart systems that enable secure, efficient, and transparent operations through decentralization, thus cutting costs across industries and improving trust between participants. 

Integrating the blockchain with generative AI can thus enable the business to improve its efficiency to compete effectively, design new products and services to offer, and explore new sources of revenue.

The Convergence of Innovation

The convergence of generative AI systems and Blockchain provides the finance industry with a unique application of this technology. 

It was noted in response to the points I have gathered from the GSDC Community Research Report that this fusion could solve traditional problems, the lack of supply of international trade finance being an example, as it at the same time fuels growth and opens up further possibilities for development.

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Now there is a strong potential of using generative AI to disrupt the space of smart contracts. 

These smart contracts operating autonomously through blockchain can be further enhanced and fine-tuned by employing generative AI which makes the delivery even more precise, quicker, and elastic as per the market trends.

Furthermore, generative AI is also a valuable entity in fraud detection or any risk management organization. 

The generative AI models can agree that by analyzing large volumes of data and determining the instances of dangerous and unusual patterns, it becomes possible to detect threats and prevent any negative impacts on the financial system.

As the new use cases and the number of DAOs, and decentralized platforms appear, in combination with venture capital funding for blockchain startups, the industry has all the potential to be disrupted. 

The combination of generative AI and blockchain yields a paradigm shift in the concept of future financial systems in terms of effectiveness, openness, and equality.

While these technologies are already becoming part of the norm in the global society, the finance market should be ready to accept the change and face the new world.

Those who endorse this revolutionary convergence will stand to benefit and exploit the opportunities that will be available in this technological era than those who will defer or reject the convergence.

Thank you for reading!