What Barriers Will Blockchain Remove from Asset Management?

Global inequality is worse than ever, and with the rising cost of living in many parts of the world as a result of the pandemic and political instabilities, the gap does not appear to be closing anytime soon. The rich-poor disparity has widened substantially in recent years, with the world's richest 1% (those with more than $1 million in assets) controlling 45.8 percent of global wealth. This inequality is exacerbated by antiquated financial systems, which restrict access to premium systems and services to just those with the most cash.

As a result, individuals seek alternative platforms that provide more access to decentralized, democratic, and transparent wealth management. To effectively bridge the wealth gap and restore trust in the financial system, new, innovative choices that go beyond standard asset management must be introduced.

Using technology to its full potential

Blockchain has transformed our attitude to currency, privacy, and the future of banking in just ten years. Despite the enormous potential for blockchain to disrupt and enhance sectors, few solutions currently employ this technology to democratize wealth management systems.

To protect wealth management from being exclusive to the wealthiest members of society, a disruptor with the ambition and capabilities to achieve these goals is required.

By leveraging the possibilities of blockchain technology, the industry is creating decentralized automated systems capable of adopting improved levels of accessibility, transparency, and efficiency in a sector that has remained mostly unchanged for decades.

Cost-cutting measures

Wealth management has traditionally provided a variety of services to foundations, trusts, and charities. Those who use these arrangements can often afford the best tax, regulatory, and legal assistance available, with the average individual requiring a minimum investment of $200,000 to $1,000,000.

Large asset management fees are typically 1-2 percent of the amount invested. With this kind of wealth out of reach for many, where does the average Joe turn to protect their money or attempt to accumulate wealth？ Blockchain eliminates the need for these outmoded wealth vehicles, and by cutting expenses, platforms can supply their services for as little as $100 and an internet connection.

Transparency is essential

However, simply increasing access will not be enough to transform the wealth management industry. In recent years, it has become increasingly evident that the next generation of investors will place a premium on transparency.

The Robinhood scandal from last year is a great example, with the trading platform fined $70 million for providing deceptive information to its consumers. Users of Robinhood became increasingly dissatisfied with what they believed to be the platform's secrecy, and concerns of unequal treatment of retail investors and institutional investors, such as huge hedge funds, arose.

To allay the fears of future individual investors, asset management platforms must commit to clearly demonstrating how they prioritize the best interests of all of their customers.

Decentralized asset management platforms can use novel smart contracts to directly service their investors, removing the need for assets to be processed through a long chain of institutions. This investment infrastructure achieves the needed transparency while reducing the possibility of arbitrary intervention or manipulation.

Using the power of blockchain

Even with the introduction of new technologies into traditional asset management organizations, the rate of change remains too slow and ineffective to meet the problems of wealth management in the twenty-first century. Decentralized platforms driven by blockchain technology, on the other hand, may quickly and efficiently harness AI developments to provide superior services than their huge hedge fund equivalents.

Blockchain technology enables programmers to simply and continually upgrade their systems. This not only improves access to these advanced AI systems by decreasing the barrier to entry, but it also maximizes the efficiency of return on investment by leveraging the most recent advancements in blockchain technology.

The following phase in asset management

As other industries embrace the future, it is becoming evident that traditional finance will soon be obsolete. A new generation of knowledgeable and vocal retail investors is demanding a system that fulfills their demands, and decentralized platforms represent not only a solution, but also the future of asset management.

Blockchain technology can give people access to a democratic, transparent, and efficient alternative wealth management system that meets the needs and demands of the modern individual investor. Opening up access to smaller investors in this way is a critical step in reforming and revitalizing the asset management industry.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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