The strategic business value of blockchain is growing.
Initially, blockchain technology powered the infamous cryptocurrency boom, giving rise to Bitcoin, Ethereum and much more. But, now the applications for blockchain technology are growing in a number of industries.
It’s presence is felt more than any other in mainstream finance, where it has gained huge momentum.
“Once a niche for crypto-experts and coding buffs, now big traditional institutions and even central banks are looking to blockchain as they build the foundations for the next generation of financial services,” explains Dmitry Tokarev, CEO and founder, Copper Technologies.
Below, taking into account the impact of the current pandemic on the healthcare and financial systems, Tokarev and three other experts explore the strategic business value of blockchain in finance and beyond.
1. The implications of Covid-19
Tokarev believes that in the investment space, the rise of Covid-19 and the resulting economic turmoil has led institutional investors, from traditional hedge funds to major banks, to begin looking at cryptoassets as a hedge against the market and impending inflation.
He says: “10 years ago, a bank like JP Morgan would have been extremely sceptical of cryptocurrencies — now they offer a crypto bank account.”
Meanwhile in the policy space, Tokarev explains “there are major steps being taken towards the adoption of blockchain technology. In the UK, the Bank of England is actively exploring how they would implement a Central Bank Digital Currency (CBDC), while some countries, like Lithuania, are already issuing crypto coins in early trials.
“Blockchain is already being widely accepted and adopted, shaping the future of finance. The question now is how firms will integrate this step-change infrastructure without losing the edge of innovation or competitive advantage.”
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2. The financial services revolution
Perhaps more than any other market, the financial services industry is experiencing rapid disruption with the entrance of new players, such as neo banks and Fintechs.
To cope with the evolving needs of customers, companies must adopt new technologies to outpace their competitors and remain relevant.
“Traditional payments processes are slow, costly and unreliable. Blockchain technology has the potential to revolutionise the current broken model by enabling faster, more transparent and cost-effective cross-border payments that can be processed in seconds, not days or weeks.”
Findings from Ripple’s recent Blockchain Payments Report showed that 45% of respondents are already in production, piloting or close to signing with a blockchain provider.
Treacher adds: “If companies move fast and adopt blockchain, they can innovate quickly, meet customer demands and enjoy a significant return on their investment.”
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3. Optimising industries
Explaining the merits of the technology, Julian Sawyer, managing director, Europe, at Gemini, says that blockchain provides “a fundamentally new, more efficient, secure and immutable way to transfer value and record transactions, unaffected by borders or physical locations. These characteristics mean there are huge opportunities for blockchain to revolutionise processes and systems in industries that are not currently optimised.”
On implementing blockchain technology, he continues: “On any wide scale and realising its strategic value – whether in a consumer or business setting — will depend on how effectively these specific use cases and applications are developed.”
4. New strategic and revenue value
The core advantages of blockchain lie in its decentralisation, cryptographic security and immutability.
Tamara Haasen, chief of staff at IOHK, reveals that “the technology allows information to be verified by the network itself and for value to be exchanged without having to rely on a third-party intermediary. Rather than there being a singular form of blockchain, the technology can be configured in multiple ways to meet the objectives and commercial requirements of particular use cases.”
This means that blockchain has “the disruptive potential to empower new operating models, but its initial impact will be to drive operational efficiencies and security, harnessing the power of multiple verifying computers, in multiple locations, ensuring no single point of failure, or focus for a targeted attack. Cost can be taken out of existing processes by removing intermediaries, or the administrative effort of record keeping and transaction reconciliation. This can shift the flow of value by capturing lost revenues and creating new revenues for blockchain-service providers,” continues Haasen.
As an example, she points to the recent Cardano Virtual Summit 2020, where Atala PRISM was launched.
“This is a decentralised identity system, compatible with any blockchain system and with the potential to give millions of ‘unbanked’ people self-sovereign identities and access to a blockchain marketplace of financial and social services. The potential for blockchain to become a new open-standard protocol for trusted records, identity and transactions, is therefore very much here to stay,” she adds.