The 3 Challenges Businesses Face with Blockchain
As individuals and businesses not only increasingly rely on the digital world, but trust it more and more with incredibly personal, private and confidential data, the need for a trusted encrypted network is greater than ever. Enter blockchain.
Invented by Satoshi Nakamoto, blockchain is one of the latest encrypted network technologies being utilised across the globe. Because of the way blockchain works it’s often heralded as one of the safest and most cost-effective ways of carrying out transactions. Whether this is money, goods, property, work, or even votes, this technology creates a record whose authenticity can be verified by entire communities and anyone with an internet connection can use it.
But blockchain technology isn’t without it’s risks. We’ll examine what these risks and challenges are, and how businesses can overcome them.
What is blockchain and what is it used for?
Blockchain is a record-keeping network that links bitcoin and other types of cryptocurrency. It’s a public digital database that stores information about this virtual currency and it has the potential to replace traditional exchanges.
The ‘blocks’ in the term ‘blockchain’ are the information and the ‘chain’ is the database itself. This database is stored across lots of computers. The information that’s stored on each block is information about financial transactions, who is making the transactions, and a unique code, which is designed to distinguish it from other blocks.
As this is such sensitive information, it can’t be changed without the consensus of a majority of users. While the risk of fraud is minimal, it still does occur, which is what happened when nearly 73 million USD worth of customers’ bitcoins was stolen from one of the world’s largest cryptocurrency exchanges, the Hong Kong based Bitifinex.
While its main market is cryptocurrencies, it could prove useful for big names like Apple, which has already stated its interest in blockchain-based digital money.
Also read: Investing Money Online – Practical Tips
What are the challenges faced by blockchain businesses?
While the advantages for businesses using blockchain are numerous, there are still some challenges that must be overcome in the meantime.
The legal challenges
Financial and business regulators want to ensure that criminals can’t exploit the privacy that comes with a blockchain transaction. Because of the ability to exchange money anonymously, it’s feared that money laundering will become an even greater problem. Whilst laws in the UK property market helped reduce a lot of money laundering, this new technology opens up a whole new area for criminal activity.
In a world where everything is on demand and instantaneous, one of the main challenges facing blockchain is its intrinsic complexity.
Many organisations are finding that implementing a blockchain solution as part of an existing digital transformation project is not only complex but time consuming.
This leads to many businesses having to weigh up the short and long-term costs and benefits.
As with any new technology there is an air of uncertainty. Though many service providers claim that blockchain is ready for production, many are cautious. When a technology is in its infancy there are a number of challenges that must be addressed before there is a large-scale up-tick in use of the technology.
As with all new and emerging technology in order for businesses to benefit from it, and not succumb to potential pitfalls and flaws, seeking the help of specialist companies to implement this technology whilst also helping to ensure they are adhering to the complex laws surrounding it, is imperative.