Blockchain Upgrades Banking Using Proof-of-Assets and Game Theory

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The banking industry has seen a huge transformation since its inception. In recent years, there has been an strong increase in the demands of customers. Hence, banks are always looking for new methods and ways to interact to make sure their customers are satisfied and their demands are being met. Along with a concept called “Game Theory“, blockchain technology has been gradually taking small steps to drastically improve the entire process of banking.

Banking-as-a-Service (BaaS)

BaaS marks the innovative concept that takes the customer to a new level of experience without making any restrictions to stay within the boundaries of traditional banking norms. If, nowadays, everything is possible with a finger tap using a mobile phone in a distant location, then why treat banking any different? In this digital age, people want their banking activities to cross beyond the regular working hours and be accessible 24×7 when they have the need to make a transaction or are in need of money. As customers are looking for more open networks and shared technologies, open collaboration becomes a needful. Collaboration and consolidation become key to BaaS. This flexibility demonstrated by the BaaS model will certainly enable banks to integrate blockchain solutions to solve the issues prevailing in the finance World.

“Game Theory”

Game Theory is the study of mathematical models of strategic interaction between rational decision makers. It has been found that applications in various fields of Social Science as well as in logic and computer science. Modern Game Theory begins with the idea that is relevant to the existence of mixed strategy equilibria in two-person zero-sum games and the 1930 proof given by John Von Neumann.

Game Theory has two main branches: Cooperative and non-cooperative. Non Cooperative Game Theory covers competitive social interactions where there will be some winners and some losers. What is the most famous thought experiment in competitive Game Theory is the Prisoner’s Dilemma. This describes a game of social interaction that involves 2 prisoners. Let us call them X and Y. X and Y were arrested on escaping from the scene of a crime and based on the evidence the Officials have already collected, the 2 prisoners have to spend 2 years in jail. But the Officials wants more, So they offer them a deal that if one confesses to the crime and other the partner does not then one will be granted immunity for cooperating and will be free to go. Your partner though has to spend 10 years in jail. If both confess it then both will be ending up spending 5 years in jail. But neither of you confess both will spend only 2 years in jail. Both X and Y are now split up and have to make decisions independently. They are not aware of what their partner is planning to do. They are not brothers and sisters, they are hardened criminals. So the best outcome to keep safe everything they will not confess and serve 2 years in jail each. The outcome in which they both confess and they serve 5 years each is the “Nash Equilibrium“. In this type of scenario, it makes sense to choose the course of action that benefits you the most no matter what everyone else decides to do. Then there are Cooperative games when every player in the team has agreed to work towards a common goal.

BANKEX Clubs BaaS With Blockchain Technology 

The banking sector currently works in the suboptimal equilibrium as they are unaware of the co-players move and most importantly trust & transparency. Blockchain can integrate with the traditional banking system by uplifting the trust among market participants. This can be achieved by a blockchain’s feature of recording the transactions on an open ledger which is distributed among its network members.

BANKEX is a leading global financial technology company which is developing a  tokenization ecosystem providing its customers with technology and services at every stage. BANKEX uses a Proof-of-Asset(PoA) protocol to connect Bank-as -a-service (BaaS) and blockchain together.

 

We have already seen Proof-of-work(PoW) for payments transactions done. Miners are paid for the work they do. They invest power and computation power, and are therefore rewarded on the same basis. This is not the case for the Bitcoin network. Whoever finds the proper the verification the earliest, is rewarded.

We too have seen Proof-of-Stack(PoS) for Ethereum Network, wherein the creator of the signature key for a transaction block must prove ownership of a stake in the system in the form of a non-zero cryptocurrency balance. Proof becomes complicated when real assets come into the picture. Take the example of a car, in order to purchase it, you need to know the make, model comical comic con common and power, fuel consumption, warranty terms, insurance cost, and leasing options. The main aim behind the proof of asset protocol proposed by BANKEX is to avail continuous auditing of an asset that would serve to prove its existence and minimize the risk of carrying out transactions with the Asset.

Disclaimer

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