Basics and Prospects
Technology comes with both gains and pitfalls. Along with developments in web technologies and emergences of newer online services, security and privacy of data has become a concern among users.
That explains why the need to invent more flexible and safer online technologies for data access and sharing is being felt. While relatively new when compared to other Internet security solutions such as VPN, BlockChain technology is already being hailed as the secure and future-ready technology ideal for carrying out transactions.
What is it?
A blockchain can be described as an anonymous online ledger which deploys data structure to simplify transactions. Blockchain enables users to use and manipulate the ledger safely without requiring involvement of third party entities. A bank’s ledger is usually linked to a secure, centralized network. Blockchain is anonymous and so its usage protects user identity. Its algorithm reduces the need to rely on people for transaction verification.
Nuances of blockchain technology
In blockchain technology, two entities work on the same resource, mostly a distributed database and the inputs taken from both parties are placed on a block. Each block is thereafter ‘chained’ to the subsequent block by means of a cryptographic signature. Thus, blockchains can be deployed as a ledger that can be accessed by users with permission.
Prospect of financial entities and sector
As of now, leading banking institutions and related financial entities are experimenting with this emerging technology for their transaction needs. They can utilize the technology for needs like back end work, record keeping, money transfer, and so forth. In a blockchain application, participating entities like banks can access single information sources.
The users can also track documentation and validate ownership of assets in a digital way, real time. This can be useful in creating CBS (nothing to do with the giant TV station) solutions and obvious banks are warming up to the technology.
Other areas of usage
The majority of entities interested in embracing blockchain technology are banks and financial entities, but its advantage can also be leveraged by other sectors. Experts are of the opinion that entities dealing with slow unreliable transactions and serving niches with subpar payments systems should switch to this technology. The benefits include irrevocability, reliability, and transparency.
- Media and Telecom industry: Deployment of blockchain technology in companies dealing with telecommunication and media is a prudent step. In such entities, low-cost micro-transactions are done randomly and in huge numbers. These can be executed, sans the fees needed by existing payment networks and lead to an operational cost reduction in the long run. For instance, a newspaper website may charge the readers per article/page than the monthly fee. Using blockchain technology is useful for securing digital property rights.
- Hospitality and travel: In sectors like hospitality and travel, using blockchain technology for transaction management makes sense. Using a shared, distributed ledger is useful for simplifying the settlement process in these scenarios. Blockchain technology can be used to manage loyalty points programs that many users are fond of using. It can also be used to store medical records with precision. Sharing of such records while having the ownership will become easier for users, as well.
- Public Sector entities: While large scale adoption may still take some time, public sector entities can also gain by using Blockchain technology. Entities involved in property and asset management, vehicle registry, digital id creation for citizens will benefit from switching to this technology. Even energy and utility providers can deploy this technology to simplify transactions.
The hurdles lying ahead
Despite the obvious and numerous advantages of Blockchain technology, large scale deployments can prove to be tedious. There exist a few hurdles for its implementation and resolving them may require some time. These are:
- Scalability of the technology is something that needs to be clarified. Only then it can be adopted by mainstream users.
- Fitting blockchain with existing legislation and regulations can be quite tough. These can change from one country to another.
- Another issue that needs to be resolved in this regard is Interoperability between private operators and government entities. Deploying blockchain protocols acceptable to all entities may not be easy.
Blockchain technology has made banks and financial entities interested for simplified transactions management sans errors and with absolute transparency. It can also be useful for other sectors. However, a few existing hurdles have to be resolved before mass adoption of this technology.