Disintermediation

The concept of disintermediation can be explained with the aid of an example. Imagine that you want to send money to a friend in another country. You go to a bank who, for a fee, will transfer your money to the bank in that country. In this case, the bank maintains a central database that is updated, confirming that you have sent the money. With blockchain technology, it is possible to send this money directly to your friend without the need for a bank. All you need is the address of your friend on the blockchain. This way, the intermediary; that is, the bank, is no longer required, and decentralization is achieved by disintermediation. It is debatable, however, how practical decentralization through disintermediation is in the financial sector due to massive regulatory and compliance requirements. Nevertheless, this model can be used not only in finance but in many different industries as well.