The emergence of the ‘blockchain technology’ is poised to transform the way people transact online. No wonder, companies are hopping on to this break-through technology, which was first introduced by an unknown programmer or group of programmers known by Satoshi Nakamoto in 2008. Blockchain can be used to facilitate peer-to-peer exchange of assets, property, contracts, etc using cryptography. It is a distributed ledger which maintains a list of records called blocks, which comprise a time stamp. This time stamp contains information about a certain transaction taking place (its date and time). This information is subsequently linked to the previous block in the blockchain. Blockchain records are visible to all members of a network and can be easily monitored. These transaction records are protected by a groundbreaking peer-to-peer cryptographic validation. It’s important to mention that data once recorded in a block cannot be altered.
So why is blockchain such a big thing for corporate enterprises? This technology drives transparency in transactions and also provides security to people’s money and data. It also ensures speedier and tamper-proof transactions. Blockchain enables companies to be cost-efficient as they can trim down middle man costs. A report published in CB Insights stated that around $20 billion of middle-man costs is expected to be slashed going forward thanks to this technology. The efficacy of the blockchain technology can be best understood by the fact that it is being steadily embraced by global giants. It is true that the immense potential of blockchain is largely exploited by the financial sector. According to a Deloitte University Press report, 30 of the world’s biggest banks have joined a consortium to build blockchain solutions, and Nasdaq is working on a blockchain-powered private market exchange. We know for a fact that cash transfers can take days, often lack a “received” receipt, and come with fees. This blockchain technology can remove all these shortfalls in the banking system.
The significance of this technology is only accentuated by Nasdaq CEO Bob Greifeld. “Blockchain technology will not only redefine how the exchange system operates but also the global financial economy as a whole.” An IBM report only reinforces this thought. The report says 15% of the global banks will use blockchain by 2017 and another 66% will adopt this technology by 2020. A joint survey conducted by Synechron and TABB Group reveals that 55% of bankers expect blockchain to have a huge impact on the financial services industry over the next ten years.
Other industries are steadily adopting blockchain as well. Microsoft has deployed a cloud-based blockchain-as-a-service. IBM offered blockchain-as-a-service in logistics space, tracking food products as they move from farms and factories to store shelves. The blockchain ledger can record a product’s location, temperature, etc using tags and sensors. Blockchain can secure intellectual property and creative digital products like music and images. Further, IBM and Samsung have offered a proof-of-concept built partly using Ethereum, a blockchain-base framework, to demonstrate how blockchain can support Internet of Things (IoT) applications by supporting transaction processing devices. The distributed nature of the ledger can drive coordination among multiple devices. Even the government authorities are excited about this technology – the British government is even mulling incorporating blockchain into their student loan payments.
Interestingly, global players are upbeat about blockchain but investments in this technology have dipped this year. According to CoinDesk’s latest quarterly research report, $376 million were raised this year, which is 17% less than the amount raised in the year-ago period. It is possible that companies are not doubting the effectiveness of this technology but are only adopting a wait-and-watch approach, probably taking their own time to see where this technology can be of help in carrying out their day-to-day transactions.
Although the blockchain technology will go a long way in automating peer-to-peer value transfer, it is not free from vulnerabilities. Human fraud, double spending, compromise of wallets, servers, and even the possibility of an attack against the crypto are areas the blockchain application must address.
There is no denying the fact that blockchain is here to stay and will transform the way companies conduct day-to-day transactions. Companies are looking at ways to remain cost-effective and improve performance efficiency, and blockchain is an ideal application to cater to their needs.
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