Are We Ready for Blockchain?
The market for cryptocurrencies and in particularly Bitcoin has been growing since 2009, and by now, many believe that cryptocurrency is the next great disruptive technology. The value of a single Bitcoin has recently passed the $15,000 mark, which drove a lot of mainstream attention, but also a lot of concerns about the speculative aspect of this evaluation.
The technology behind cryptocurrencies is the Blockchain. The definition of blockchain can be found in its own etymology, it consists of a continuous chain of encrypted data blocks. Each block contains information about the transaction performed and a connection with the previous block. It’s a secure and distributed database accessible to everyone, that guarantees the integrity of the data stored.
The image above shows how the process of blockchain works. This guarantee that the same bitcoin is not spent twice.
There are numerous applications, and a lot of business areas that can benefit from the use of this technology, here are some examples:
In financial operations, the blockchain can be used as a security protocol, or even remove the need for the banks to act as the middleman. According to a survey from PwCs – Threats to the Financial Services sector – “45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively.” So, it would be easier to control financial operations using blockchain.
This business area is an extremely operational and paperwork intensive industry, with dozens of procedures, middlemen, and steps throughout the process. “A combination of blockchain technology along with digital identity can alleviate the above-discussed challenges of physical identity proofs, and expedite a few of the pre-transaction activities such as underwriting, financial evaluation, obtaining a mortgage commitment.” According to a survey made by Deloitte.
Insurance essentially stands on a trust management system, where the brokers manage and operate the entire system. Blockchain can enable these agents to be more efficient and transparent, or even replace them completely. According to Bernard Marr, a specialist in technology and data expert, “Blockchain provides a solution to drive efficiency and security that would allow the personal data to be controlled by an individual while verification is registered on the blockchain.”
The logistics industries have been operating the same way for decades, and the demand is constantly growing. This technology could reduce the need for human interaction, increasing the liability and adding a new layer of accountability that can be better tracked and monitored by regulators. For example, Maersk and IBM announced a joint venture to deploy a blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time.
Being public and decentralized, the blockchain is ideal to track exactly the destination of charity donations. For example, this prototype – The DAC (Decentralized Autonomous Charity), allows a more transparent way to donate to charitable/Non-profit projects.
Blockchain is here to stay, there is no doubt that this technology has the potential to revolutionize transactions by reducing complexity, cutting costs, boosting accuracy and lowering counterparty risk. The cryptocurrencies are only the first and more visible application for this tool at this moment. On the next few years, we should see other businesses areas gradually adopting blockchain, and potentially even changing the way they perform their business. What do you think about block Chain? Send me an email to email@example.com
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