In God we trust, all others must bring data. – W. Edwards Deming
But can we trust the data that is brought in? With the advent of blockchain technology which uses cryptographic algorithms to secure transactions and link them with previous transactions, we can now trust the data which is stored in a decentralised ledger.
Businesses conduct and perform transactions with several agents, partners, and intermediaries every day. Although they have appropriate systems and processes in place, a lot of the exchange relies on trust among all the parties involved. These exchanges that require the participating entities to follow a protocol and process turn out to be extremely time and cost intensive. But now businesses seem to have found an answer to these challenges in Blockchain, which allows them to form and participate in networks and exchange information in real-time. It addresses the key issue of trust and also reduces transaction time and cost.
Thinking about the merits of the technology led me to explore potential use cases:
Above are some of the challenges the technology can address.
Businesses have begun inviting a diverse set of members across industries to participate in the blockchain revolution, the success of which depends on its participants. Each participant has a complete version of the database which they can view and to which they can add transactions. Whenever a transaction happens in the network it needs to be approved by a majority of participants making it difficult for a few participants to hack the system or entities to gain unauthorised access. It helps maintain the confidentiality, integrity and availability of data. As soon as a transaction is approved, the ledger or database that all the network participants have access to, is updated. It removes the intermediaries in the system as there is no longer a need to maintain a central database of transactions. All this ensures increased transparency in doing business.
The challenges that customers face in receiving visa on time and delay in business travel because of delay in communication between the parties involved can be resolved as all parties are part of a network and there is increased visibility to track the application status. Customers need not rely on a third party to book a hotel in a foreign destination by performing a credit card transaction. They can simply choose the option as per their convenience and make payment as and when required. The hotel is also informed in real-time about the verification and validation of customer – whether the customer is a bona fide customer and part of the network. It also makes global fund transfers convenient to carry out since no third party is required to transfer the funds deposited with them to a customer’s account in another country. The result? Seamless transactions and experiences across countries and currencies.
Infosys Finacle’s 2019 Banking Trends report predicts the consortium trend to pick up speed with both single-industry and cross-industry alliances emerging to form blockchain ecosystems. Multi-industry consortia are expected to be the best consortium model for a broad and diverse ecosystem. As per the report, blockchain adoption will also spur growth in adjacent technologies such as Cloud, Artificial Intelligence and the Internet of Things, as the industry is expected to use blockchain in combination with other technologies to maximize its impact.
Blockchain applications will transform financial services, simplify business models with positive impact in the area of user and customer experience. It will also ensure transparency across stakeholders with the possibility and ability to track transactions from end-to-end. The industry is expected to benefit greatly from faster transactions and lower transaction costs.