We are living in the golden age of technological developments with various evolving technologies, from artificial intelligence to gene editing. Blockchain technology is one such technology that has the potential to transform the future. In the year 2017, several initiatives for the adoption of blockchain had been taken by prominent market players and large food industry participants. This year, the applications of blockchain technology such as food supply chain management and safety traceability are expected to garner the attention of the market. However, at present, it is more used as a financial ledger.
Blockchain Technology is a digitized, decentralized, and a public ledger of all cryptocurrency transactions. The technology is known as the world’s leading software platform for digital assets. The blockchain is more fast and accurate, as compared to the traditional database methods for distributed applications. Blockchain technology is still in its nascent stage, although, it has the potential to change not just the banking structure but also the way to manage the database. From fighting counterfeit products to creating a reliable network, blockchain is expected to be the next buzzword in the coming years.
According to the market research report by BIS Research, titled ‘Blockchain Technology in Financial Services Market - Analysis and Forecast: 2017 to 2026’, the application of blockchain could lead to a per-year cost savings of $6-8 billion in KYC/AML, $30-40 billion in trade finance, and $50-60 billion in capital markets.
Employing blockchain technology enable the transparency in the system. Therefore, to remove the middlemen, various tech giants are adopting blockchain technology. For instance, Alibaba, one of the world’s biggest e-commerce giant is using the blockchain platform for supply chain tracking. The objective of Alibaba to opt for blockchain technology is to reduce the costs incurred by food fraud. The pilot program will use the blockchain based food Trust Framework to track international shipments. Moreover, an Australian public company, Australian Securities Exchange (ASX), is planning to replace its existing ‘CHESS’ (Clearing House Electronic Subregister System) with a blockchain platform based on Distribution Ledger Technology (DLT). CHESS is used for clearing, settlement, and other post-trade services for Australian Stocks.
The movement to blockchain based solutions will require substantial investments and efforts including the annihilation of current infrastructure, which might make institutions hesitate from changing from legacy systems and processes. To remain competitive in the evolving technological landscape, companies are adopting a bimodal approach wherein they are integrating blockchain functionality along with their current infrastructure and running them in parallel for increasing efficiency and reducing costs.
As private industries realize the cost-saving and risk-reducing potential of Blockchain Technology in Financial, state legislatures are also responding to it. Various countries such as Russia and China are adopting blockchain technology. China is looking to use blockchain technology to manage big data in audits. The country is using the blockchain technology to improve the data storage, management, transmission, and other work modes in future big data audits. The blockchain technology’s encryption, algorithm, timestamp, and data self-management will enable the data center to track and record every auditor’s data events and other activities that require data collection, identity management, and the creation of auditor data operation`s.
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