Microsoft has entered into an agreement with the Israeli Bank Hapoalim to bring blockchain based system to the mainstream financial system

Credit: http://www.blockchaintechnologies.com

The company is helping the bank to create Digital Bank Guarantees using blockchain technology.

Digital Bank guarantee is exactly like an ordinary bank guarantee but in a digital form. It is a sort of digital financial contracts between the bank and individuals.

The bank in question guarantees that a debtor’s liabilities will be met if s/he fails to fulfil the contractual obligation.

The project is expected to simplify the process by making it simple and quick.

Now there is no need for the customer to physically visit the bank because they can generate digital guarantees securely and

since the whole process is based on blockchain technology, there is supposedly no risk of the contract being tampered.

However, the exponents of blockchain technology see its deployment in the traditional banking system as limited and going against the fundamental nature of such technology, which is decentralization and disruption of the current financial systems.

They also argue that the blockchain system is impossible to tamper and hack only because the ledgers are spread thin throughout the global network but if it is kept in a controlled, centralized network of a company or an institution it is bound to be hacked.