Why blockchain adoption goes viral and how to keep up with the mainstream?
Some may say, this whole world is going crazy. No matter where you step, somebody’s talking about decentralized technologies and opportunities they offer. Blockchain adoption is everywhere, indeed. These days, it offers a new techno-economic model that will help improve the world economy. Projects like a transport blockchain pilot for the Port of Rotterdam can eliminate pesky “red tape problem” that lasts for decades. And that’s only a start!
In this piece, we’re starting a new series of articles about blockchain adoption. It’s about time to figure out why blockchain adoption goes viral and how to keep up with the mainstream. Let’s dig in, shall we?
How it all began
As you already know, Satoshi Nakamoto introduced blockchain in 2009 as a public distributed ledger. Since then, the blockchain evolution has begun.
In different years, “blockchain adoption” had the same different meaning. So, in 2017 it was all about Initial Coin Offerings (ICO) capable to disrupt the traditional ways of fundraising and financing. The whole bunch of investors was over the moon with their coin-related investment programs. Oh well, the reality sobered many of those poor souls after a while.
In turn, 2018 will be definitely remembered as the Crypto Winter. It was full of panic, tears and dashed hopes related to blockchain-based currency. However, this was the year when blockchain focus shifted from pure money-making to the adoption of the new-age technology. Yes sir-e bob, from now on, blockchain is not only a money-making machine anymore!
Better information systems, new business opportunities: it’s all about blockchain!
In February 2018, the European Commission (EC) opened the EU Blockchain Observatory and Forum aimed to unite the European economy around blockchain. The main goal of the forum is to create the most comprehensive repositories of blockchain use cases. That’s a nice move, indeed! In fact, blockchain adoption could result in new business opportunities and serious fund management upgrades.
In April 2018, 22 countries including 21 EU member states and Norway signed a Declaration that created a European Blockchain Partnership (EBP). The reason is, European countries are interested in adopting decentralized technologies promising new trends in fields of EU information system security, privacy, energy efficiency, and interoperability. Last but not least, all those trends fully comply with EU law.
What will be the next thing blockchain will be used for?
What next, indeed? These days, people play around with blockchain-based technologies trying to apply them for various areas. In the nearest future, there are three obvious ways decentralized technologies can go. They are:
- FinTech solutions standing for borderless payments (say hello to crypto coins), accountable and transparent banking/fund management systems. In other words, the world of finance can get truly user/business-friendly with strategies and products blockchain adoption offers.
- What would you say about supply chains with tracking time going from 6 days down to 2 seconds? Blockchain adoption can make them real. For food suppliers such as Walmart, transparent and instant logistic solutions eliminating red tape issue make a real boon.
- Solutions providing an unprecedented level of data protection make another use case for blockchain. With a decentralized data storage system, you have no need to keep the whole mess of sensitive information in a single location. Instead, you can break files into itty-bitty chunks and distribute them across the entire computer network. Any computer (aka node) in the network holds a copy of the ledger, so there’s no such thing as a central control point for blockchain users. As a result, data corruption is not a big problem.
Finance as a regular field for blockchain adoption
Payment/fund management traditionally makes a regular filed for blockchain adoption. Well, you can’t help it. This is how people work: if you can use it for war, give it a try in the field of finance/banking.
According to the Harvard Business Review, blockchain technologies have enough power to do to banks/financial institutions what the Internet did to media. Indeed, for modern financial institutions, decentralized technologies are a big help as they can ensure safe money storage, instant payments, cost-efficient wire transfers, and reasonable currency exchange rates. Moreover, unlike rigid (and greedy) card networks, blockchain payments are customer-oriented and need no middlemen to manage assets.
Blockchain applications in finance
1. Fraud risk reduction
Centralized database systems used for money management are far from being perfect. They can easily fall victims to hacker attacks and system errors. Blockchain in turn offers a more secure fund management system secure enough to cut the risk of fraud.
As soon as people decentralize and distribute blockchain, there is no chance of a single point of failure. A specific block with a cryptographic mechanism stores every single transaction that is extremely difficult to corrupt.
All the blocks link to each other. If one block becomes damaged, the linking mechanism allows to track the damage and gives a hacker no time to make changes in the overall system. That means better security for your funds and no money for a fraudster.
2. Cost-efficient KYC procedures
Modern financial institutions and banks still spend tons of money to comply with (Anti-Money Laundering) and Know Your Customer (KYC) norms. Both procedures take a lot of time as they have to be performed individually by all the money based institutions.
A Thomson Reuters survey revealed that the overall estimated cost of AML and KYC processes ranges from $60 million to $500 million yearly. At present, banks upload customer KYC data into a single registry used for checking the information of existing or new clients.
At the same time, blockchain adoption enables the independent verification of each client by one bank or financial organization that would be accessible to other banks. As a result, the KYC procedure doesn’t have to be restarted again. What does it mean for financial institutions? More cost-efficient compliance departments, of course!
3. Easy fund management and instant payments within a business-friendly environment
A new generation of blockchain-based asset management solutions offers much more than separate tools. elegro, a FinTech company developing proprietary blockchain solutions for merchants and their clients, came out with a whole ecosystem, businesses can integrate with. The system is based on a suite of interrelated products:
- Gateway for accepting direct (with no middlemen) crypto/fiat payments from clients
- Wallet for smart banking and personalized fund management
- Retail turning a smartphone into a full-on mobile POS
Such an approach makes online payment lightning fast and secure as you don’t have to deal with third parties and share sensitive info with someone else. As for fund management, it can get very easy as you can keep track of assets, transactions, and clients at any time from anywhere.
Well, guess that’s enough for today. Don’t miss a follow-up story!
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