Paul Lalovich, Managing Director at Agile Dynamics, has said that some of commentary regarding the demise of blockchain is very premature, and highlighted how a common misconception is that it is the same as cryptocurrency.
The crypto market’s recent crash has made some question the role blockchain can play in a digitalised society – even though blockchain is potentially one of the most adaptable technologies that is currently in play across the world.
It may be a common misconception that blockchain and cryptocurrency are one and the same, when in reality, the former is a solution that enables the latter. You wouldn’t write off internal combustion engines if the automobile industry tanked, and similarly you shouldn’t dismiss blockchain due to the current state of the cryptocurrency market.
Blockchain is a highly diverse technology, with practically limitless use cases across numerous industries. It can be used in ways to reduce costs, improve speed and efficiency, drive innovation, build trust, improve financial processes, and to introduce smart contracts and transparent payment processes. And that’s just scratching the surface.
As with most new technologies, all it takes is a little bit of imagination and the world can become your digital oyster.
Here are some examples of how blockchain can help entities within the public and private sectors to become more efficient:
Government operations can benefit from blockchain’s potential to improve access to data. Public data is often difficult to access and read, which contributes to inefficiencies and even, in some instances, errors.
By implementing blockchain-based records and smart contracts, governments can enhance interactions with citizens by simplifying them. Data security can be increased, too. There is also the opportunity for blockchain to generate significant cost savings by enabling efficient registration and verification functions.
Amongst other applications, implementing blockchain within the healthcare industry can enable greater administrative efficiency. It can also offer improved access for researchers to valuable historical data sets. Patients too will have more control over their data.
Blockchain has the potential to address current weaknesses in cross-border payments and trade finance, by reducing the number of intermediaries required. It can also enable geographical independence. Financial services can also benefit from additional savings in post-trading settlement in capital markets and regulatory reporting.
Supply chain management
Through blockchain, supply chain businesses are able to exchange and reach consensus on crucial information, without the need for expensive central intermediaries to facilitate complex negotiations. By synchronising data across the network in a verifiable manner, complex negotiations can be carried out peer-to-peer.
One of the drawbacks faced by the trade financing sector is slow, burdensome methods. These can prove disruptive for operations, and can make it difficult to manage liquidity. Blockchain technology can streamline trade finance deals and simplify cross-border transactions. This will allow for easier transactions, regardless of geographic location.
There are limitations to peer-to-peer (also known as P2P) transactions, such as geographical restrictions, usage fees, or security vulnerabilities. Blockchain can be used to help overcome these, introducing seamless, secure alternatives.
Money laundering protection
Money laundering is a global concern that blockchain can be used against. The encryption capabilities of blockchain enable it to offer recording keeping – an essential component in the Know Your Customer (KYC) process, which is the practice of verifying the identities of clients to prevent financial crimes.
Using blockchain technology in cross-border transactions will enable a secure and more efficient method of creating an immutable record of sensitive activities. This makes it the ideal solution for international payments and money transfers.
Blockchain can also help to streamline the entire process and improve efficiency overall, by introducing automated processes and reducing the use of intermediaries.
The case for blockchain as a solid contributor to a more efficient digital-first society is clear, but there are some blockers that must be overcome for it to be truly successful and transformative. Some key roadblocks are:
- A lack of awareness amongst industry leaders, which needs to be addressed.
- Organisational difficulties have contributed to a lack of cooperation, which is hindering blockchain adoption and lowering its inherent value.
- Blockchain requires a culture shift from a centralised to decentralised approach, which can take time to achieve.
- Regulations and standards are still being determined; governments struggle to keep up with the speed at which technology develops, therefore regulations are slow to come into play.
- Strict rules must be enforced to maintain the security and privacy of shared ledgers – which is absolutely crucial.
- Blockchain technology must reach a certain level of mass adoption if it is to become fully efficient.
Blockchain implementation is about 80% process change and 20% technology implementation, and the former is the slower component of the two… but we are moving towards a more blockchain-enabled society, as the above obstacles are slowly overcome.
There is immense opportunity to be unleashed through blockchain technology – but understanding its purpose, value and potential must be a priority if society is going to reap its full benefits.