Blockchains, according to an article in Forbes magazine, are a secure distributed database that maintains blocks of ordered lists of records that are immutable. Blocks are the name for these unchangeable records. Each block has a ten-minute timestamp and a link to the block before it. The Bitcoin cryptocurrency introduced blockchain technology in 2009. Blockchain technology has also attracted interest from Central Banks, financial institutions, and technology firms, who are currently discussing and investigating the opportunities and challenges of using Blockchain technology. The benefits of Blockchain technology are mainly related to the transparency of data, faster access to the information, real-time synchronization of information, reduce capital requirement due to the faster settlement of trade, Immutable records reduce the chances of fraud.
Adoption of Blockchain technology and challenges.
Given its claimed features, blockchain adoption has significant benefits, but there are also some obstacles. To successfully use Blockchain technology, banks and other financial institutions must take these challenges into account.
- Security
The Blockchain is safe and secure since it is built on cryptographic principles. It took a tremendous amount of computational work to break into such a network. When this technology is applied to the banking industry, a system that can prevent unauthorized users from accessing the system is required.
2. Energy Consumption:
Blockchain technology required a significant amount of processing labor and operated as a network. It caused an enormous carbon footprint, which damaged the environment and increased energy usage. As a result, it is almost imperative that the financial sector address this problem before implementing Blockchain technology.
3. Privacy:
The experts are predicting that blockchain technology will replace banks and financial institutions. However, the people have trust in banks, not in the machine. This transformation requires making blockchain technology trustworthy for the people who are going to use it. The Blockchain should able to keep the secrecy and identity of individuals who are using it.
References: Peone, S. (2018). Blockchain technology makes its way to the INW. Journal of Business, Volume 33, Issue 6
Robert Francis. (2018) Cryptocurrency: Bitcoin, Blockchain and the future of money. Worth Business Press, pp-14.
Ye Guo and Chen Liang. (2016) Blockchain application and outlook in the banking industry Financial Innovation. Springer open. pp.1–12
