Undoubtedly, blockchain has revamped the financial industry on both the business and customer end. These 4 challenges are needed to be addressed for future prosperity.
Blockchain opened advanced, and innovative trends that are leaving an impressive impact on industries such as healthcare travel, and supply chain management. In the last two to three years, blockchain has become the primary choice of every new venture.
Blockchain is an arrangement of storing data in such a way that the system can’t be hacked or cracked. It is a decentralized digital ledger of transactions distributed and replicated on all networks in the system. Numerous transactions are stored in a single block and data of every new transaction is recorded to the distributed ledger.
It is the general view of the public that applications of blockchain are limited to finance only. Because of the variety and scale of the latest technological innovations like cryptocurrency. The repercussions of blockchain in the financial sector will set a benchmark for the other industries.
Some also say that it needs strict regulatory compliance like the financial sector. This technology is also vulnerable to scams and crimes. AML (Anti-money Laundering) and KYC (Know Your Customer) prove to be effective solutions for customer screening and ID verification respectively.
Future Predictions for Blockchain Technology
Industry experts and critics have shown great interest in the use of blockchain technology in the financial sector. As it is a relatively new technology, it will take some time to evolve and settle with the existing systems.
- Blockchain integrated with AI Artificial Intelligence will be safer and provide user-friendly platforms
- The incorporation of blockchain in IoT (Internet of Things) will constitute a secure framework for digital solutions
- The maturity and development of enterprise blockchain will increase
Blockchain – Key Challenges and the Solution
Unquestionably, many industry experts, businesses, and legislators are willing to embrace blockchain technology. Nevertheless, some challenges can slow the adoption of this technology. Here are some principle challenges of blockchain technology and how to address them.
The primary problem associated with the adoption of blockchain is scalability. Although transaction networks can process thousands of transactions in a second with the best accuracy, the speed decreases while processing Bitcoin, i.e. 3 to 7 transactions per second, or Ethereum i.e. 15 to 20 transactions per second.
Mass adoption is only possible if the speed of transaction processing increases. For that, it could use Lightning Network for Bitcoin and Plasma for Ethereum.
It is the second major issue for blockchain that should be essentially addressed. Most organizations are not adopting blockchain because of compatibility concerns. Because of this, blockchains can’t communicate with others, as most of them work independently and do not share information. The lack of communication between peer networks can be a hurdle in the functioning of blockchain.
Solutions like Smarthub can bridge the communication gap among networks. These types of solutions offer universal transmission of messages. The transfer of files would be possible through this.
The standardization of blockchain is still under question. Despite having a wide range of networks of blockchain, they lack universal standardization. This doesn’t stop here, problems like interoperability, heavy costs, and difficult implementation arise because of it. It is also a barrier in the way of mass adoption, and investors plus businesses are reluctant to invest in blockchain technology.
4. Security and Privacy
Security and privacy are the primary reasons for the prosperity of new technologies and businesses. This has pushed organizations to spend more on cybersecurity and user data privacy. They have to follow global data protection regulations like GDPR (General Data Protection Regulation) – law in the European Union.
To eliminate anonymity, fake data, and having authentic and legitimate customers, blockchain can use automated KYC solutions. It is a remote identity verification process that is performed over an online medium. Government-approved ID document verification (National ID Card, International Passport, or Driving License) is used to confirm the bio-data of customers. The customers just have to upload the image of holding it in hand.
The KYC app checks the authenticity of the document and then performs facial recognition on selfies and photo IDs. It extracts the required data (Name, Nationality, DOB, and Address) from it. This data builds authentic customer profiles. The solution can be integrated into all available applications (IOS, Android, and Websites).