Blockchain, the technology behind cryptocurrencies such as bitcoin, could actually change the way we manage 401(k)s. Pundits claim blockchain represents the biggest breakthrough since the internet, with the potential to improve just about everything in our lives, including our health and bank balance. Here’s how it might also increase the amount of money we have to live on in retirement.
Key Takeaways
- Having everything stored in one easy-to-access place would give people a clearer picture of their retirement assets and perhaps incentivize them to invest more.
- More activity and interest should put pressure on financial institutions to work harder to retain clients and lead to better returns.
- Blockchain doesn’t require a third-party intermediary to validate transactions, resulting in speedier turnaround times and potentially lower costs.
- The technology, thanks to its decentralized structure, is more difficult to hack.
- Issues that need to be overcome include its energy consumption, relative lack of speed, and the fact that each block in the chain can hold only so much data.
What Is Blockchain?
Unless you’ve been living on another planet for the past decade or so, you probably have heard of blockchain. It is a digital ledger that records anything that needs to be logged and verified as having taken place securely and simultaneously across a network of computers. Every time something new happens, a record is automatically added to this type of online Excel document. And that record is safe, cannot be tampered with, and is theoretically accessible to everyone.
In short, this technology offers a much more potentially secure, trustworthy, efficient, and organized way to record data than we currently have. While that might not sound particularly special, it is actually a pretty big deal.
What Impact Can Blockchain Have on 401(k)s?
One thing that could really do with being saved by a technological breakthrough is the U.S. retirement system….
