Blockchain, is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree root hash). But how effective is it?
Let's look at few opinions from experts on how effective blockchain really is:
To date, blockchain has had varying degrees of success. The technology remains very much in the early stages of development, and that means many are anticipating it to be effective in the future, rather than today.
That said, there are definite success stories thus far, across several industries and use cases. For example, the banks HSBC and ING used blockchain last May to execute the first commercially viable trade finance transaction for a shipment of soybeans. While such a transaction traditionally takes up to 10 days to complete, the blockchain-powered transaction took less than a day.
But again, it's early days, so even though that single transaction was successful, we can only rely on estimates of just how effective blockchain will ultimately be in improving trade finance. A recent report from Bain & Company and HSBC, for instance, projects that global trade volumes will increase by $1.1 trillion by 2026.
At present, however, there are clear limitations to blockchain that continue to significantly dent its effectiveness for the time being.
1. Scalability remains a challenge. The biggest cryptocurrency /tokenized projects continue to suffer from low transaction rates and high fees. Currently, the likes of Visa and PayPal can process thousands of transactions per second more than Bitcoin.
And building decentralized applications - software applications that run on blockchain platforms such as Ethereum, connecting users and providers directly without the need for a centralized server - have found minimal success thus far. Again, this is partly due to the slow speed of such platforms, which have resulted in serious network congestion.
2. Smart contracts - agreements written in code on the blockchain - could transform the way many industries operate, such as legal and insurance. But their success in working as intended has been mixed. Ethereum's blockchain, for example, suffered an infamous breach when hackers managed to exploit a loophole in ‘The DAO’ smart contract code, allowing tens of millions of dollars to be stolen. Much work is still required to ensure smart contracts are coded to be as 'smart' as intended.
For blockchain to be effective in the 21st century, such constraints would need to be addressed at an absolute minimum.
Shashank Pattekar fintech writer
Crypto coming of age: Until blue-chip financial giants help to establish the financial infrastructure for crypto-markets, institutional investor participation will remain weak. This year, the world's biggest banks and financial bodies will start to build those structures, sending a strong signal to market participants and heralding a shift to a higher level of cryptocurrency activity.
Making our data safe again: Many organizations are gathering large amounts of personal data to hack the minds of their consumers or sell on their insights to third parties. By the same token, businesses themselves are becoming prime targets for cyber-attacks. In 2019, we expect to see decentralized digital identity products enabled by blockchain start to gain market traction, giving back control to individuals and organizations.
Health data you can trust: While data security is a concern for all industries, it is especially crucial in healthcare. Health data management is struggling to keep costs down, remain up-to-date, and support patient needs. The Synaptic Health Alliance, a consortium of leading healthcare organizations, is applying blockchain to improve Provider Data Management. This will be a key test in the uptake of blockchain solutions for the sector.
Senior Account Executive
Greenough Brand Storytellers
Enterprise data management is a global challenge and distributed ledger technology is the answer. Organizations around the world are wrestling to fully understand and implement blockchain to ensure superior business solutions and to avoid being left behind, or even excluded, as new standards are established.
This digital transformation of the speed, security, trust, and traceability of transactions benefits just about every business. A distributed ledger lasts indefinitely, and its information can be relied upon by any party, anytime, anywhere.
The information being exchanged transitions from being single dots of underutilized and inefficient data to be fully and accurately integrated into a single audit trail that is a secure, smart, automated system where all information is related and sequenced.
We can talk about examples we are working on in supply chain, digital identity, certification, registries, privacy, copyright, and countless other companies that want to integrate and save a fortune (Chilean design, Rwandan raw materials, Congolese cobalt, US patents, British component manufacturing, US assembly, global sales …). And if you're really thinking about the future, forget a company, forget a country, what about a continent!?!
The blockchain is often talked about in terms of revolutionizing our world, and so it is. What has been less of a focus is that, in Africa, blockchain is poised to liberate an entire continent from the residual ropes (and other chains) of colonialism that have held it back. This is the true trillion-dollar opportunity where blockchain will shine as it helps the African continent get its groove back.
Blockchain technology's immutable, decentralized and cryptographic qualities hold the promise to change everything from how we manage and store data to how we transact. As a result, technology is held in high regard by innovators globally. From supply chain management and e-commerce to financial institutions and government operations, blockchain theoretically has a value to offer to almost every industry. However, its effectiveness in the 21st century really boils down to its ability to
the scale along with its ability to deliver on its promise of data integrity
While a number of companies are already working on solutions to address blockchain's scalability problem, not much has been said or done about blockchain's inherent security flaws. The reality is the technology's popularity has invited unwanted attention from the hacker community who are developing neat tricks to break through blockchain's secure infrastructure. Hackers have already stolen billions from crypto users and have already developed techniques to install malware onto enterprise blockchains.
For blockchain to be truly effective, there’s an imminent need for greater awareness about blockchain’s security issues as well as solutions to counter attacks built specifically to bring down enterprises built on the blockchain.
Blockchain’s effectiveness will also be dependent on how regulators choose to have checks in place to monitor and keep out bad actors in the blockchain space.
Fusion Public Relations