Blockchain technology can transform established business processes and radically change the work with regulators. Nevertheless, blockchain remains an experimental technology – many problems of its use have not yet been resolved.
Interest to the blockchain continues to grow: back in 2016, many banks, exchanges, and fintech companies announced the launch of their technology development projects. Blockchain remains one of the hottest topics in the field of financial services and the stock markets, and there is every reason to expect an increase in the speed of its spread. Several large financial organizations immediately formed teams to study the capabilities of the technology, and some market participants joined in consortia to develop standards for its use.
The technology is really capable of protecting the data that we have to work with, while making it more accessible and transparent. In addition, the blockchain can significantly reduce costs and minimize the time required to solve problems and eliminate errors.
Implementing a blockchain is by definition a complex process, but the basic idea of the technology is simple: a distributed registry or database running simultaneously on a multitude (sometimes millions) of nodes distributed around the world between different users and organizations. The uniqueness of the blockchain lies in the immutability or irreversibility that the cryptographic protection system guarantees. For example, when transactions from the registry are grouped into blocks and written to the database, the record is preceded by cryptographic verification, as a result of which it is almost impossible to change the state of the registry by any kind of fraud. In favor of trust in the blockchain, it is also said that any changes to the data in the blockchain are possible only if network participants confirm the legitimacy of the transaction in accordance with general rules and protocols.
According to the report of the World Economic Forum, decentralized payment technologies, including Bitcoin, can transform the “business architecture” of remittances, which has not changed for more than 100 years. Blockchain can circumvent these inefficient systems and create a more open, faster and uncommissioned flow of payments around the world.
Obviously, cryptocurrency is a relatively new instrument of the financial market, but its value does not depend on the amount of labor invested, as is traditionally typical for ordinary goods and services. An assessment of the structure of cryptocurrencies showed that Bitcoin is still its most common form, although Metahash is increasing its volume and its main features that set it apart from other blockchain technologies are speed, transparency and a high level of decentralization and security.
According to analysts, blockchain can increase the efficiency of decentralized processes. For example, the use of blockchain technologies can accelerate the collection of documentation from several government agencies that do not have common systems or close organizational relationships. Such use can solve the problem of dispersed processes, such as permitting and registration.
Analysts note that there are many options for using blockchain in the financial sector: cross-border payments, stock trading, and syndicated lending. Over the next decade, the global financial industry, which includes insurance and fintech, will remain the largest market in terms of revenue from the use of blockchain technologies.
According to experts, blockchain and various other technologies of the distributed registry have already begun to spread widely outside the financial and insurance companies – the market in which they appeared initially. Promising projects are tested in various industries in which digital transformation is taking place: retail, consumer goods, logistics, art, public services, entertainment, etc.
The exchange of information between state organizations and the private sector on emergency assistance, insurance claims, medical claims and other multilateral transactions can improve the coordination of the work of these structures and significantly improve the attitude of citizens.
Blockchain technologies can not only fight
against bureaucracy and corruption, but also generally change the way public
services are provided to citizens. The possibilities are almost endless:
blockchain technologies provide citizens and enterprises with the ability to
manage and share information, reduce problems in assessing intellectual
property and paying royalties, and provide digital identification documents and