Discover the challenges of applying blockchain technology.
Blockchain technology offers users a bunch of benefits, but also offers many challenges.
Blockchain technology uses cryptography and a distributed messaging protocol to create shared ledgers among counterparties. Blockchain technology is revolutionizing the way financial institutions are conducting business when it comes to payments and other financial operations.
Challenges in Applying Blockchain Technology
Even though new products and services are evolving based on blockchain transactions, there are currently no regulations about how these transactions should be written. The distributed ledger transactions of blockchain will require industry regulations governing financial reporting to change. Blockchain technology is also requiring industries to change their auditing processes. With blockchain, information-sharing regulations will need to change in order for companies and customers to be protected. Blockchain will also need regulations that govern its smart contracts in order for people to be protected.
Just like with regulations, there is currently no common set of standards for writing blockchain transactions. Not only is there currently no common set of standards, there are currently three open-source organizations, each with their own set of standards and code. Creating competent standards for blockchain is further complicated by the fact that blockchain has a wide variety of uses. The standards for blockchain, once created, will need to take all of these uses into consideration.
Many companies fear that blockchain technology hasn’t been properly tested enough. Many users are still unsure of blockchain limitations, opportunities and challenges. As more industries are implementing blockchain technology, more blockchain adoption challenges will come to light. Another problem many companies have with blockchain technology is the issue of can the technology be trusted. This issue of trust is leading vendors to create strong encryption and security mechanisms for blockchain technology.
Blockchain technology is a valuable option when companies or users need to keep track of complex things. When multiple parties are involved with a sale and resale, problems can arise. Blockchain technology eliminates power struggles and ensures there are no points of failure. This technology is also very valuable when a transaction needs to occur but there is no well-established authority in place. With a company uses a blockchain enabled distribution ledger, they are able to track assets in ways that aren’t possible with traditional distributed databases.
Blockchain technology can be extremely helpful, especially with investment banks. Blockchain can be used to reduce the total cost of ownership by offering an alternative to traditional proprietary stacks for a severely decreased price. Blockchains can also clear and settle transactions faster and create self-describing electronic transactions. Smart contracts are able to use the programming language blockchain offers to create context-aware transactions. Another way blockchain technology is extremely helpful to users is that it can give various parties access to their own copy of a shared system of record.
Blockchain technology is still fairly new and needs a lot of work as far as regulations, standards, and validation goes. This technology has already begun to change the financial industry and is beginning to affect other industries as well. Although blockchain has many challenges to overcome, it is safe to assume that this technology is not going anywhere, due to the fact that it offers users a long list of benefits.