How is blockchain technology transforming global finance?

The IELTS Reading test is a challenging part of the IELTS exam that requires understanding of complex texts, quick reading ability, and comprehension of detailed information. The topic of blockchain technology in global finance is a highly relevant and contemporary issue that has attracted significant attention in recent years. Given its importance and presence in various sectors, there’s a high possibility that such a topic could appear in future IELTS Reading tests.

To effectively prepare for this type of content, we’ve crafted a comprehensive reading passage related to “How is blockchain technology transforming global finance?” This not only provides practice for the Reading test but also enlightens you on a cutting-edge topic.

Reading Passage

How Blockchain Technology is Transforming Global Finance

Blockchain technology has revolutionized the field of global finance. It is a decentralized digital ledger that records transactions across numerous computers securely and efficiently. Over the past decade, blockchain has transformed various financial sectors, offering unprecedented levels of transparency, security, and efficiency.

Initially developed for cryptocurrency transactions, blockchain’s potential now extends beyond just digital currencies. One of the most notable changes has been in the field of international payments. Traditional cross-border payments are often slow and costly, hindered by the involvement of multiple intermediaries. With blockchain, transactions are instantaneous and do not require a central authority, reducing both costs and transaction times significantly.

Blockchain Technology

Moreover, blockchain is enhancing the transparency of financial transactions. All transactions are recorded on a public ledger, which cannot be altered once confirmed. This reduces fraud risks and increases the authenticity of transactions. For instance, in the stock market, blockchain can be used to record the ownership of shares, ensuring a transparent and tamper-proof transaction history.

Smart contracts are another groundbreaking innovation facilitated by blockchain technology. These are self-executing contracts with the terms directly written into code. They automatically execute and enforce agreement terms when conditions are met, removing the need for intermediaries and thus reducing the risk of contract disputes and transaction costs.

Blockchain is also revolutionizing supply chain finance. It enables real-time tracking of goods and verifies the authenticity of products. This is crucial in industries like pharmaceuticals and luxury goods, where counterfeit products are a major concern.

However, blockchain technology is not without its challenges. Scalability remains a significant issue. As the number of transactions increases, the blockchain becomes heavier and slower. Also, the regulatory environment around blockchain and cryptocurrencies is still evolving, with different countries adopting varying approaches to regulation.

In conclusion, blockchain technology is undeniably transforming global finance by introducing faster, more secure, and efficient methods of transaction. Its impact continues to grow, promising a future where financial processes are significantly streamlined and democratized.

Questions

Multiple Choice

1. What is blockchain technology primarily used for in the beginning?

   • a. Supply chain management
   • b. Stock transactions
   • c. Cryptocurrency transactions
   • d. Contract disputes

2. How does blockchain improve the transparency of financial transactions?

   • a. By storing information in a centralized ledger
   • b. By allowing only selected parties to view the transactions
   • c. By recording transactions on a public ledger
   • d. By increasing the speed of transactions

True/False/Not Given

1. Blockchain transactions are typically slower and more costly than traditional cross-border payments.
2. Smart contracts require manual intervention to execute once conditions are met.
3. The scalability of blockchain technology is currently a major challenge.

Matching Information

Match each innovation to its impact:

• A. International payments
• B. Smart contracts
• C. Supply chain finance

1. Enables real-time tracking of goods.
2. Reduces costs and speeds up transactions.
3. Automatically executes agreement terms.

Summary Completion

Complete the summary using words from the passage:

Blockchain technology has significantly improved the efficiency of ____, offering features such as ___ and tamper-proof transaction history. In addition, ____ allow automatic enforcement of agreement terms, reducing the need for intermediaries.

Answer Keys & Explanations

Multiple Choice

1. c. Cryptocurrency transactions

   • Explanation: The passage states that blockchain technology was initially developed for cryptocurrency transactions.

2. c. By recording transactions on a public ledger

   • Explanation: The passage explains that blockchain improves transparency by recording all transactions on a public ledger which cannot be altered once confirmed.

True/False/Not Given

1. False

   • Explanation: The passage mentions that blockchain transactions are instantaneous and reduce costs compared to traditional cross-border payments.

2. False

   • Explanation: Smart contracts are self-executing and do not require manual intervention.

3. True

   • Explanation: The passage highlights scalability as a significant issue with blockchain technology.

Matching Information

• A. International payments – 2. Reduces costs and speeds up transactions.
• B. Smart contracts – 3. Automatically executes agreement terms.
• C. Supply chain finance – 1. Enables real-time tracking of goods.

Summary Completion

Blockchain technology has significantly improved the efficiency of international payments, offering features such as transparency and tamper-proof transaction history. In addition, smart contracts allow automatic enforcement of agreement terms, reducing the need for intermediaries.

Common Mistakes

1. Skimming and scanning inadequately: Not giving sufficient attention to the entire text can lead to missing crucial information.
2. Misinterpreting complex sentences: Complex sentence structures often confuse, so ensure to break them down for better understanding.
3. Overlooking specific keywords: Keep an eye out for significant words that determine the nature of the information.

Vocabulary

Here are some challenging words from the passage:

• Decentralized (adj.) [ˌdiːˈsɛntrəlaɪzd] – Removed from a single central location or authority.
• Tamper-proof (adj.) [ˈtæmpər pruf] – Resistant to tampering or unauthorized changes.
• Scalability (n.) [ˌskeɪləˈbɪləti] – The capability of a system to handle a growing amount of work.

Grammar

Passive Voice

Passive voice is used to emphasize the action rather than the subject performing the action. Example from the passage:

• “All transactions are recorded on a public ledger.”

Conditional Sentences

Conditional sentences are used to speculate about possible situations. Example from the passage:

• “They automatically execute and enforce agreement terms when conditions are met.”

Advice for High IELTS Reading Scores

1. Practice regularly: Daily reading practice enhances comprehension skills.
2. Simulate real test conditions: Practice under timed conditions to improve speed and accuracy.
3. Focus on high-frequency IELTS topics: Familiarize yourself with common IELTS Reading topics.

By following this structured approach and diving deep into relevant content, such as blockchain’s impact on global finance, you’re setting yourself up for success in the IELTS Reading test.