Bitcoin was the first known application of blockchain technology in 2008, but it is now widely used in a variety of industries. By 2030, around 30% of all customers are anticipated to use blockchain as a form of technology. Additionally, blockchain will be beneficial to businesses as a way to facilitate value transfer and will add value by more than $170 billion 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 to create NFTs for popular artists, and the Chhattisgarh and Assam governments are developing various use cases around the immutable nature of the blockchain, such as land registration and court case records.
Crypto exchanges can organize crypto brainstorms along the lines of hackathons in universities and students from leading Indian universities can solve problems related to social good and value creation for public infrastructure. Some of the main topics were Blockchain ownership titles like NFTs, decentralized EV charging infrastructure platform, Metaverse for tourism, and platform for local MSME artisans to promote their products using NFTs.
Corporations will start to see a significant reduction in operating overhead as we witness a proliferation in the use of smart contracts. With the global economy becoming more interconnected and blockchain enabling decentralization of stakeholders and business models, smart contracts on blockchain can lead to the creation of new business models and automated liquidity pools. The top 3 areas where blockchain will revolutionize business are discussed below:
Reaching the unbanked for financial inclusion
People without bank accounts numbered 1.7 billion worldwide in 2020. The unbanked can be reached for financial inclusion with the use of blockchain-based decentralized finance (DeFi). Eliminating unnecessary administrative costs and minimum capital requirements can help drive equal financial access. With the wider adoption of DeFi and the penetration of digital assets, consumers now have more options in terms of capital allocation and have access to risky assets that can play a role in hedging against rising consumer prices.
Additionally, blockchain payment networks enable instant money transfers between users and business networks. Most online and POS networks can easily include crypto-based payments as an option and unlock international consumers access to local products. . These payment options provide a simple and affordable way for those without regular local bank accounts. Remittances through digital assets will reduce the cost of cross-border transactions.
Cross-border payments and money remittances
Given the drawbacks of the current system for cross-border payments, the idea of distributed ledger technology has been gaining ground in the banking and finance industry. Even in cross-border transactions, blockchain enables instant direct payments without worrying about tampering. Blockchain technology can enable secure transfers across an essentially unlimited number of bank ledgers in cross-border payments. It also helps bypass bank middlemen who act as intermediaries to facilitate money transfers between banks. In any part of the world, the transaction is safe, transparent from start to finish, fast and cheap. Additionally, blockchain allows for fees that are much lower than those associated with current money transmission techniques.
Solving KYC issues
Problems with current KYC regulatory processes could be solved with blockchain technology. For account opening and other crucial functions in almost all financial companies, including banks, people are required to go through and complete the KYC procedure. Banks are also required to regularly update the KYC information for each of their customers to ensure there are no inconsistencies. While KYC is a labor-intensive and time-consuming process, it is the essential component without which no bank or financial organization can operate effectively because it allows for effective monitoring of transactions.
Banks will be able to deliver better compliance results, increase efficiency and increase customer security with the help of blockchain in KYC and Anti Money Laundering (AML). It will also help reduce the cost of these procedures. The technology can help with institutions’ ability to verify consumer information, as well as efficiently monitor and analyze data needed 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 susceptible. The biggest obstacle to successful blockchain implementation is the lack of harmonized regulation and enforcement. Making blockchain a part of everyday life is a tall order given that millions of people still do not understand the fundamental technology behind digital assets. Blockchain technology is still in its infancy, and many of the use cases have yet to be built on top of this new technology that enables decentralized, permissionless execution of smart contracts. Concerns that companies have about using blockchain and integrating it with legacy systems are only exacerbated by the cost and difficulty of finding qualified experts in this field. This is why it is important that both the public and private sectors encourage investment in blockchain education and countries that take the first steps in such structured educational programs will be able to reap the benefits of having an exportable international workforce for this new blockchain. upcoming technology. .
Thinking in the future
Many of the most significant difficulties of blockchain can be seen as the typical growing pains of any new technology. Blockchain can be a formidable solution once implemented, given the benefits companies already derive from it and the growing need for visibility and transparency within and between companies. It can also reduce the overhead of launching new business models and change the way value is exchanged, as long as we can address issues around scalability, efficiency, and security.
We are seeing multiple experiments and companies emerging that are working with governments and large corporate players in every market trying to foster awareness and increase use cases for this new blockchain technology. With the right policy efforts in major markets like India, which are the world’s hubs of technical talent, we could unlock the full potential of global scale for this new age technology.
Disclaimer
The opinions expressed above are those of the author.
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