Bitcoin was the first known application of blockchain technology in 2008, but it is now widely used across a variety of industries. It is expected that by 2030, around 30% of all customers will use blockchain as a form of technology. Additionally, blockchain will be beneficial to businesses as a form of facilitating the transfer of value, adding more than $170 billion in value by 2025.
In India, we are already seeing promising growth in blockchain adoption in the public and private sectors. Many state governments like Maharashtra are currently using blockchain distributed ledger technology to issue Covid-19 certificates. The Telangana government is working to create NFTs for folk artists, and the Chhattisgarh and Assam governments are developing various use cases around the immutable nature of the blockchain, such as: B. Land register and court register.
Crypto exchanges can organize crypto ideathons modeled after college hackathons, and students from major colleges across India can work on problems of social welfare and value creation for public infrastructure. Some of the main topics were land deeds on blockchain as NFTs, a decentralized charging infrastructure platform for electric vehicles, metaverse for tourism and a platform for local MSME artisans to promote their products with NFT.
Businesses will see a significant reduction in operational costs as we see increasing use of smart contracts. With the increasing interconnectedness of the global economy and the blockchain enabling the decentralization of stakeholders and business models, smart contracts on the blockchain can lead to the creation of new business models and automated pools of liquidity. The top 3 areas where blockchain will revolutionize business are discussed below:
Reaching the bankless for financial inclusion
In 2020, there were 1.7 billion unbanked people worldwide. The unbanked can be reached for financial inclusion by using blockchain-based decentralized finance (DeFi). Eliminating unnecessary administrative costs and minimum capital requirements can help achieve equal access to finance. With the wider adoption of DeFi and the penetration of digital assets, consumers now have greater choice in capital allocation and access to risky assets that can play a role in hedging against rising consumer prices.
In addition, blockchain payment networks enable instant money transfers between users and merchant networks. Most PoS and online networks can easily include crypto-based payments as an option and unlock international consumer access to local products. . These payment options offer an easy and affordable option for those who don’t have regular local bank accounts. Remittance via digital assets will reduce the cost of cross-border transactions.
Cross-border payments and money transfers
Given the disadvantages of the current system for cross-border payments, the idea of distributed ledger technology has gained traction in the banking and financial sectors. Even with cross-border transactions, blockchain enables immediate direct payments without fear of manipulation. Blockchain technology can enable secure transfers across an essentially unlimited number of bank books when making cross-border payments. It also helps in bypassing bank middlemen who act as intermediaries to facilitate money transfers between banks. Anywhere in the world, the transaction is secure, transparent from start to finish, fast and inexpensive. In addition, blockchain allows fees that are much lower than those associated with current money transfer techniques.
Solving the KYC issues
The problems with the current regulatory KYC processes could be solved by blockchain technology. Account opening and other important functions in almost all financial companies, including banks, require individuals to go through and complete the KYC process. Banks are also required to routinely update KYC information for each of their customers to ensure there are no inconsistencies. Even though KYC is a labor-intensive, time-consuming process, it is the essential building block without which no bank or financial organization can function effectively, as it enables effective transaction monitoring.
Banks will be able to use blockchain in KYC and Anti Money Laundering (AML) to achieve better compliance outcomes, increase efficiency and increase security for customers. It will also help reduce the cost of these procedures. The technology can support institutions’ ability to verify consumer information, and it also efficiently monitors and analyzes the data required for background checks, KYC and AML.
Challenges and how to overcome them
While the future of blockchain looks bright, one cannot ignore the fact that there are still many unsolved issues that make it vulnerable. The biggest obstacle to the successful implementation of blockchain is the lack of harmonized regulation and compliance. Making blockchain a part of everyday life is a difficult endeavor as millions of people still don’t understand the underlying technology behind digital assets. Blockchain technology is still in its infancy and many of the use cases have yet to build on top of this new technology that will enable permissionless and decentralized execution of smart contracts. Concerns companies have about using blockchain and integrating it with legacy systems are only compounded by the cost and difficulty in finding qualified experts in the field. Because of this, it is important for both the private and public sectors to encourage investment in blockchain education, and countries that take the first steps in such structured education programs will be able to reap the benefits of an internationally exportable workforce for this emerging new technology.
I’m looking forward to
Many of blockchain’s biggest difficulties can be seen as typical growing pains for any new technology. Blockchain can be an impressive solution once implemented, given the benefits companies are already reaping from it and the increasing need for visibility and transparency within and between companies. It can also reduce the overhead of launching new business models and transform the way value is exchanged – provided we can solve the problems of scalability, efficiency and security.
We see multiple experiments and companies working with governments and major corporations in each market to spread awareness and expand use cases for this new blockchain technology. With the right policy efforts in key markets like India, which are the tech talent hubs of the world, we could unlock the full global potential for this new age technology.
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Disclaimer
The views expressed above are the author’s own.
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