The future of investing in cryptocurrency?

3 Realistic Problems Blockchain Technology Can Solve

Bitcoin was the first known application of blockchain technology in 2008, but it is now widely used in a variety of industries. By 2030, it is expected that about 30% of all customers will use blockchain as a form of technology. In addition, the blockchain will be useful to businesses as a form of facilitating value transfer 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. Several state governments such as 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 different use cases around the immutable nature of the blockchain, such as land registry and court case records.

Cryptocurrency exchanges can organize hackathon-style crypto ideas in colleges and students from major colleges across India can work through issues related to social good and value creation for public infrastructure. Some of the main topics were ownership titles on Blockchain such as NFTs, decentralized EV charging infrastructure platform, Metaverse for tourism, and a platform for local artisans MSME to promote their products using NFT.

Companies will start to see a significant reduction in operating overheads as we see the widespread use of smart contracts. As the global economy becomes more interconnected and blockchain enables the decentralization of stakeholders and business models, smart contracts on the blockchain can lead to the creation of new business models and automated liquidity pools. Below we discuss the top three areas in which blockchain will revolutionize business:

Reaching the unbanked for financial inclusion

The number of people without bank accounts reached 1.7 billion worldwide in 2020. 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 widespread adoption of DeFi and the penetration of digital assets, consumers now have more options in terms of 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 funds transfer between users and merchant networks. Most point of sale and online networks can include crypto-based payments as an option and unlock international consumer access to local products. . These payment options provide a simple and affordable method for those who lack regular local bank accounts. Transfers across digital assets will lower the cost of cross-border transactions.

Cross-border payments and money transfers

Given the shortcomings of the current cross-border payments system, the idea of ​​distributed ledger technology has gained traction in the banking and financial sector. Even in cross-border transactions, the blockchain enables instant direct payments without the worry of tampering. Blockchain technology can enable secure transfers across an unlimited number of bank ledgers in cross-border payments. It also helps bypassing bank intermediaries who act as intermediaries to facilitate the transfer of funds between banks. Anywhere in the world, the transaction is secure, transparent from start to finish, fast and inexpensive. In addition, the blockchain allows for much lower fees than those associated with existing money transfer technologies.

Know your customer problem solving

Problems with existing regulatory ‘know your customer’ processes can be resolved by means of blockchain technology. For account opening and other critical functions in almost all financial firms, including banks, individuals need to implement and complete KYC procedures. Banks should also routinely update KYC information for each of their customers to ensure that there are no inconsistencies. Although KYC is a labor-intensive and time-consuming process, it is the basic building block without which no banks or financial institutions can operate effectively as it allows for effective monitoring of transactions.

Banks will be able to deliver better compliance results, increased efficiency, and increased security to customers 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 aid organizations’ ability to verify consumer information, as it efficiently monitors and analyzes 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 a lot of unresolved issues that make it vulnerable. The biggest obstacle to the successful implementation of blockchain is the lack of coordinated regulation and compliance. Making blockchain a part of everyday life is a difficult endeavor as millions of people still do not understand the underlying technology behind digital assets. Blockchain technology is still largely in its infancy, and there are many use cases yet to be built on top of this new technology that allows for the decentralized and unauthorized execution of smart contracts. Corporate concerns about using blockchain and integrating it with legacy systems are exacerbated by the cost and difficulty of finding qualified experts in the field. This is why it is important for both the public and private sectors to 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 upcoming new technology.

looking forward

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

We are seeing many experiments and companies working with governments and major corporate players in every market in an effort to promote awareness and increase use cases for this new blockchain technology. With the right policy efforts across key markets like India which are the centers of artistic talent in the world, we will be able to unlock the full global potential of this new technology.



The opinions expressed above are those of the author.

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