Blockchain technology is able to transform established business processes and radically change the work with regulators. However, the blockchain remains an experimental technology - many problems of its use have not yet been resolved.
Interest in blockchain continues to grow: back in 2016, many banks, exchanges and fintech companies announced the launch of their own technology development projects. Blockchain remains one of the hottest topics in the financial services and stock markets, and there is every reason to expect its adoption rate to increase. Several large financial institutions formed teams to explore the possibilities of the technology, and some market participants united in consortiums to develop standards for its use. According to a report presented at the World Economic Forum in 2016, over the past three years, more than $1.4 billion has been invested in the study of blockchain and the possibilities of its application in the financial services industry.
Technology can really protect the data we work with while making it more accessible and transparent. In addition, the blockchain can significantly reduce costs and minimize the time required to resolve emerging problems and eliminate errors.
Blockchain emerged as the technology to launch bitcoin into circulation, and at first was used solely to manage cryptocurrencies. However, since its introduction in 2009, the scope has expanded significantly. And now, in a variety of articles, forums and conferences, new options for using the technology are being discussed, including in trade reporting; for non-cash payments, checks and payments; in accounting; monitoring; risk management; audit; management and financial accounting; compliance (including the prevention of financial crimes, although, of course, the possibilities of blockchain in this area are not limited to the fight against fraud). The fact is that the information stored using the blockchain can be recorded in a shared ledger that is available in real time or very close to it. This means that all stakeholders can be directly involved in the process - even those who previously could only count on a standard report at the end of a transaction.
Blockchain implementation is by definition a complex process, but the basic idea of the technology is simple: a distributed ledger or database running simultaneously on many (sometimes millions) nodes distributed around the world among various users and organizations. The uniqueness of the blockchain lies in the immutability or irreversibility guaranteed by the cryptographic security system. 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 through any manipulation. The fact that any data changes in the block chain are possible only if the network participants confirm the legitimacy of the transaction in accordance with the general rules and protocols speaks in favor of the trust in the blockchain.
Blockchain is a ready-to-use technology
In 2023, distributed ledger technologies are changing the way we do business and helping companies reimagine how they manage physical and digital assets. Fancy cryptocurrencies and non-fungible tokens (NFTs) are capturing the media headlines and the public imagination, but these and other blockchain and distributed ledger technologies (DLTs) are also generating interest in enterprises. Like the TCP/IP protocols that provide the underlying support for enterprise network communications, shared ledgers could eventually become an integral, albeit invisible, backbone of business operations, allowing established industry leaders to expand their portfolios and create new value streams, as well as enabling startups to dream of creating new interesting business models. The Blockchain and DLT platforms have overcome the cycle of frustration and hype and are steadily moving towards real-world performance. They are revolutionizing the way we do business across organizational boundaries and helping companies reimagine how they create and manage identity, data, brand, lineage, professional certifications, copyrights, and other tangible and digital assets. In fact, while companies have canceled purely speculative blockchain projects during the pandemic, they have doubled down on those with proven benefits. In 2023, technological advances and regulatory standards, especially in closed networks and platforms, are helping to drive the adoption of technology in areas other than financial services. Evolving technologies and platforms are helping to move forward while maintaining compatibility, scalability and security. As businesses embrace blockchain and DLT platforms, creative use cases are emerging across many industries that are fundamentally changing the way business is done across organizational boundaries.
Blockchain - how technologies and standards develop First-generation blockchain and DLT have proven the feasibility of applications such as cryptocurrency trading, clearing, and settlement, but they have also proven to be slow, energy-intensive, and impractical to scale. At first, the market was teeming with numerous platforms and protocols. However, it lacked technical or technology standards, and without interoperability, enterprises could not interoperate across multiple platforms. Early use cases were limited to simply transferring value from one party to another. Users could not create conditional transactions or contingencies that would allow the parties to agree on terms. In addition, implementation was limited by the unique challenges associated with transaction validation. For example, cryptocurrencies and other use cases have verified transactions using the Proof-of-Work consensus mechanism, a complex and time-consuming computational process that consumes large amounts of power and has high transaction fees and slow transaction times of 10 minutes or more for each transaction. Such challenges are common in the early stages of most technologies, and entrepreneurs have begun to industrialize blockchain and other DLT platforms with academic institutions. By 2022, improving technology, evolving standards, and new delivery models will drive blockchain adoption in enterprises.
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Private networks and trusted. Many early DLT platforms were low-trust, public networks that anyone could participate in. As a result, these networks often included fraudulent participants and lacked complete privacy and anonymity. In 2022, risk-averse businesses have more robust and secure options: closed (i.e. private) networks that allow only selected, verified participants to participate; and trusted networks, which can be joined by anyone with a verified identity, and whose actions are controlled by permission-based roles. Technological improvements. The growing focus on usability and speed allows for practical use cases that are not supported by first-generation applications, including the ability to create self-executing contracts and contingencies. New types of cryptographic processes for verifying transactions consume much less power than Proof-of-Work and eliminate bottlenecks, enabling faster transactions and lower transaction fees and energy consumption. For example, the Proof of Authority consensus mechanism is used to validate transactions across many private and trusted networks preferred by enterprises. Improved compatibility. Many DLT platforms have emerged suitable for corporate use. Polkadot, Cosmos, Wanchain, and many other emerging protocols and platforms enable enterprises to connect multiple blockchains and seamlessly interact, collaborate, exchange data, and transact with multiple entities across multiple platforms. This allows organizations to develop core infrastructures that support multiple use cases and custom applications. The architecture, consensus mechanism, token type, and other characteristics vary by platform, and organizations may need to learn more than one, depending on their goals and use case. Technological and innovative ecosystems. With the proliferation of DLT platforms, innovation has grown at the same time, and a vast dynamic ecosystem has emerged. Its members develop decentralized applications that provide specialized functions such as identity management and supply chain management.