The global economy is on its way to digital transformation, progressing rapidly, and myriad technological innovations that have smashed the old, rigid, conventional processes have set the stage for the same. Talk about any industry, and it would be appropriate to lay a comment that we are on a continuous path of advancement and have come a long way due to the invention and introduction of many ingenious, breakthrough technologies. Blockchain technology is one such robust invention that has already dug deep holes in the transactional environment.
Blockchain is an open, distributed ledger or a decentralized database that is designed to efficiently record transactions between two parties in an easy-to-verify and permanent way. And when we talk about transactions, these are not only the gamut of financial transactions, but virtually everything that has got value.
A blockchain can be technically understood as a chain of datasets of money, digital asset, code, etc. that are grouped together into containers called blocks. These blocks are linked to make a chain, and secured using cryptography techniques. These blocks are continually updated as the transactions keep taking place. Cryptography ensures that records are not counterfeited or changed by anyone else and users can only edit the parts of blockchain that they own.
Interestingly, the technology wipes away the role of middlemen or intermediaries, which comes as a relief to the industry. Blockchain allows entities (people or businesses) to freely transact and interact online with one another with almost no turbulence. In fact, blockchain is one of the only few technologies that has made transactions without intermediaries successfully possible.
Well, this is because the data is hosted by millions of computers simultaneously and everyone can themselves use the system and help run it. There is no central database where records are stored, ie, no central company or person owns the system; and allows transacting entities to verify each other’s facts. This offers a surfeit of benefits to varied industries, who have been eyeing the technology, considering to adopt it. Online transactions could now take place more frequently and efficiently, as the involvement of intermediaries gets eliminated. Then, the payment of third party-fees which is quite often a burden to many businesses, is counted out, and the amount could now be swallowed internally.
The world has been in awe of such technologies and eventually, Bitcoin became the talk of the town. Not many knew about the underlying technology and the driving force behind the successful implementation of the digital currency which took the world by a storm. Well, Bitcoin only marked the beginning of the bright world for blockchain technology, and there are far too many applications that use the splendid technology today.
Going ahead, there are still too many industries that are yet to exploit the potential of this treasured development. These are primarily the industries which are suffering from certain inefficiencies like lack of transparency, security concerns, high middlemen costs, etc. Most of the businesses are contemplating ways to adopt blockchain by customizing it to their advantage. Perhaps, they are closely watching the success stories of others before they write their own, for others to flip pages.
As far as the Indian scenario is concerned, a PwC report indicates that 56% of Indian businesses are inclined to make blockchain a part of their core business, and three key areas that the technology will impact are payments and funds transfer infrastructure, digital identity management and post-trade settlements.
Financial institutions have been the early adopters of the blockchain technology in the country, where its use is still continuing to expand, as the security and savings offered by the technology are enormous. Indian real estate industry, which has so far witnessed an uneven system of recording property transactions and land records, is also getting more serious about using blockchain technology to transform its operations. The healthcare domain in the country is also in need of the blockchain shield, as it currently lacks a definitive system that could quickly record the extensive data and make sharing of the same possible securely.
Industries like logistics and supply chain management, energy management, data analytics, cloud storage and various public sector industries also have their hands raised, indicating a positive nod to blockchain, considering its innumerable benefits. Even the private companies have begun to explore the technology for improved governance, enhancing efficiency of business processes, and ensuring transparency.
With a fast-paced penetration of blockchain across the country and around the world, there are enough debates already doing rounds. The question which arises is whether the emerging technology is going to disrupt the traditional, existing business models. Would it pave the way for some promising times ahead? A recent World Economic Forum report predicts that by 2025, 10 percent of GDP will be stored on blockchains or blockchain-related technology. This makes it clear that potential of blockchain technology is certain to be realized in a world where data protection and verification is of such high importance. – CIO
The author is Narinder Kumar, EVP, Technology Services, TO THE NEW