The World Economic Forum has said that decentralised payment technologies like bitcoin could transform the “business architecture” of money transfers, which, due to reliance on central authorities such as banks and clearing houses, has remained static for the last 150+ years.
Bitcoin transactions are stored and transferred using a distributed ledger on a peer-to-peer network that is open, public and anonymous. Blockchain is the underpinning technology that maintains the Bitcoin transaction ledger
How will they impact banks?
As a digitised, secure, and tamper-proof ledger, blockchain could enhance accuracy and information-sharing into the financial services ecosystem. Swiss bank UBS and UK-based Barclays are both experimenting with blockchain to expedite back office functions and settlement, which some in the banking industry say it could cut up to $20 billion in middleman costs.
Closely connected with banking and several key industry requirements is data security. Blockchain has the power to deliver almost bullet-proof data authentication.
Though blockchain’s ledger is public, its data communications are sent and verified using advanced cryptographic techniques — ensuring that data is coming from correct sources and that nothing is intercepted in the interim.
Blockchain for musicians?
If Blockchain is widely accepted it will be increasingly difficult for hackers to break into the system, as the cyber-protections of the technology are more robust than legacy systems. One way blockchain reduces conventional cybersecurity risk is by simply removing the need for human intermediaries — thus lessening the threat of hacking, corruption, or human error.
Creative people like musicians are also turning to blockchain to make content sharing fairer for creators using smart contracts, whereby the revenue on purchases of creative work can be automatically disseminated according to pre-determined licensing agreements or smart contracts ushered in by Blockchain. This will transform the legal system and the way for drawing up contracts. The very basis on good customer service is a contract between the buyer and the seller with a promise to perform a certain task or deliver something in exchange of an agreed compensation.
For this engagement between the buyer and seller to work in a Blockchain principle, there is a need to create a smart contract which will be recorded in the digital shared ledger. The smart contract has the conditions for a transaction to occur. It enables the business rules implied by the contract to be embedded in the blockchain and executed with the transaction. For instance, a smart contract can have a condition for the automatic release of payments, without any human intervention, on the receipt of the agreed goods or services as per the terms of the contract.
In the coming days there will be hardly any industry that will not be disrupted or transformed, depending on your point of view, by Blockchain. We have a choice of being overwhelmed by the coming waves or learning how to ride the surf; and the time to do it is right now.
Courtesy: Abhijit Roy