3 real problems that blockchain technology can solve

Bitcoin was the first well-known application of blockchain technology in 2008, but it is now widely used across a variety of industries. By 2030, it is expected that approximately 30% of all customers will use blockchain as a form of technology. Additionally, blockchain will benefit businesses as a form of value transfer facilitation and will add more than $170 billion in value by 2025.

In India, we are already seeing promising growth in blockchain adoption across 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 on creating NFTs for folk artists, and the governments of Chhattisgarh and Assam are developing various use cases around blockchain’s immutable nature, such as land registration and court records.

Crypto exchanges can organize crypto ideations along the lines of college hackathons, and students from major colleges across India can work across issues of social good and value creation for public infrastructure. Some of the main topics were country matters on Blockchain like NFTs, decentralized EV Charging infrastructure platform, Metaverse for tourism and platform for local MSME artisans to market their products using NFTs.

Companies will begin to see a significant reduction in operating costs as we see a proliferation of smart contract adoption. With the global economy becoming more interconnected and 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 three areas where blockchain will revolutionize business are discussed below:

To reach the unbanked for financial inclusion

People without a bank account numbered 1.7 billion worldwide in 2020. The unbanked can be reached for financial inclusion using blockchain-based decentralized finance (DeFi). Removing unnecessary administrative costs and minimum capital requirements can help push for equal financial access. With the wider use of DeFi and penetration of digital assets, consumers now have more choice in capital allocation and have 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 provide an easy and affordable way for those who lack regular local bank accounts. Transfer via digital assets will lower the costs 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 greater traction in the banking and finance sector. Even in cross-border transactions, blockchain enables instant direct payments without concern for manipulation. Blockchain technology can enable secure transfers across a largely unlimited number of bank accounts for cross-border payments. It also helps bypass bank intermediaries who act as intermediaries to facilitate money transfers between banks. Anywhere in the world, the transaction is secure, transparent from start to finish, and fast and affordable. In addition, blockchain allows fees that are much lower than those associated with current money transfer techniques.

Solve the KYC issues

The problems with today’s regulatory KYC processes can be solved with the help of blockchain technology. For account opening and other important functions in almost all financial companies, including banks, individuals need to perform and complete the KYC procedure. Banks must also routinely update the KYC information for each of their customers to ensure there are no inconsistencies. Although KYC is a labor-intensive, time-consuming process, it is the essential building block without which no bank or financial organization can operate effectively because it provides effective transaction monitoring.

Banks will be able to provide better compliance results, increase efficiency and increase security for customers using blockchain in KYC and Anti Money Laundering (AML). It will also help to reduce the costs of these procedures. The technology can help with institutions’ ability to verify consumer information, and it also effectively monitors and analyzes the data required for background checks, KYC and AML.

Challenges and how to overcome them

Although the future of blockchain looks bright, it is impossible to overlook the fact that there are still many unresolved issues that make it receptive. The biggest obstacle to the successful implementation of the blockchain is a lack of harmonized regulation and compliance. Making blockchain a part of everyday life is a difficult endeavor given that millions of people still do not understand the basic technology behind digital assets. Blockchain technology is still very much in its infancy and there are many of the use cases that have yet to be built on top of this new technology that allows permissionless and decentralized execution of smart contracts. Concerns that businesses have about using blockchain and integrating with legacy systems are only exacerbated by the cost and difficulty of finding qualified experts in this field. This is why 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 having an internationally exportable workforce for this upcoming new technology.

Look forward to

Many of blockchain’s main difficulties can be seen as typical growing pains for any new technology. Blockchain can be a formidable solution once implemented, given the benefits that businesses are already getting from it and the growing need for visibility and transparency within and across businesses. It can also reduce the costs of launching new business models and change the way value is exchanged – provided we can solve the problems of scalability, efficiency and security.

We are seeing more experiments and companies emerging working with governments and large corporate players in each market trying to create awareness and increase adoption of this new blockchain technology. With the right policy efforts across major markets like India, which are the world’s tech talent hubs, we will be able to unlock the full global potential of this new technology.

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