Blockchain Technology is Renovating Business Processes
Blockchain, a distributed ledger technology, has been heralded as a major technology breakthrough in almost every industry, ranging from manufacturing to agriculture and financial services to insurance and retail. Known for its tamper-proof ledger, blockchain eliminates intermediaries, lessens costs, augments speed and reach, in addition to offering greater transparency and traceability for business processes. The technology’s popularity has seen a dramatic rise in recent years. The year 2019 saw a major blockchain proposition as both private companies and governments showed interest in accepting digital currency.
Facebook, for instance, divulged its cryptocurrency, Libra, which enables people to purchase things or send money to others with zero charges. On the other side, the Defense Advanced Research Projects Agency (DARPA) is experimenting with blockchain to create a more efficient, robust, and secure platform that will allow personnel from anywhere to transmit secure messages or process transactions. Those transactions can be traced through numerous channels of a decentralized ledger. Major financial services providers also use distributed ledgers for enhanced delivery of banking services. Credit to its potential to expedite back-office settlement systems, the technology is garnering much interest in the financial sector. Major banks such as Goldman Sachs, Bank of America, Barclays, JPMorgan, and more others are already exploring blockchain’s potential.
Introduced firstly as the core technology behind Bitcoin, the appeal of blockchain lies in its use of peer-to-peer network technology along with cryptography. When it comes to investment, the last couple of years saw diversification in industries spending on this technology with a particular rise of players from the supply chain, life sciences and the technology, media, and telecom sector. Though the application of blockchain in these industries is different than sectors like BFSI, it is getting huge traction and showing higher adoption.
Blockchain delivers enhanced security and trust in several ways. As it is a chain of blocks, each block stores information about transactions users make. In this shared network, anyone can see the content it contains but with access. Thanks to its array of capabilities, blockchain is entering across industries far beyond its initial fintech applications. More and more companies in diverse sectors are expanding and diversifying their blockchain initiatives. Looking at the report, the technology, media, and telecom sector is leading the way towards blockchain adoption with 49% of organizations planning to spend nearly US$5 million in the coming years.
As an emerging technology comes with some drawbacks and poses challenges to its implementation, blockchain is not an exception. While this technology is in its infancy, it faces surged barriers to its adoption. Some biggest hurdles include lack of trust, regulatory uncertainty, inability to scale, intellectual property and compliance concerns, among others. One of the major challenges the blockchain technology can engender is trust. In this way, companies must encounter trust issues at nearly every turn and build confidence in it. The primary use of this technology today is as a distributed ledger for cryptocurrencies, especially bitcoin. Most cryptocurrencies use blockchain to record transactions.
While in the last few years, businesses have captivated more towards blockchain, the year 2020 paves opportunities for the technology to move further away from the experimental phase to real business-ready solutions, and it will continue to enlarge in the future.