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We see blockchain everywhere ― from loyalty program technologies in retail to supply chain companies that aim to achieve complete transparency. But how useful and safe is blockchain technology truly? We know Satoshi Nakamoto conceptualized the first decentralized ledger for the Bitcoin cryptocurrency, but since then, the technology has evolved considerably.
For example, blockchain became a catalyst for Ethereum, the Bitcoin-inspired ecosystem that supports the creation of decentralized apps and NFTs through smart contracts. Vitalik Buterin, its creator, envisioned a software development platform where developers can create new cryptocurrencies. Therefore, as its use cases expanded throughout the years, the Ethereum price USD increased, so the underlying cryptocurrency benefited from the blockchain’s evolution.
Considering this relation, what if we could leverage blockchain features in the real world? How could companies access and use it legally with the limited legal framework? Let’s find out.
Blockchain is a pretty complex technology
Adopting a new technology requires a certain level of complexity and understanding, and it can also become available to a wider audience. For now, blockchain may be too advanced to be easily used since there are not enough professionals on a global level who can work towards introducing it into regular systems.
Blockchains use scripts to enter and store information into a block, which transforms into a block header hash when it’s full. The hash then becomes part of a chain of blocks, creating the blockchain effect. This explanation is only a simplification of the entire process.
The transaction processes on the blockchain are also quite sophisticated, especially since every blockchain functions differently. Companies have to choose between various options, such as Bitcoin, Ethereum, or Solana, according to their needs.
Blockchain lacks the trust it needs from users
Although we’ve been accustomed to cryptocurrencies like Bitcoin for a while, blockchain has yet to become a reliable solution for users. Testing blockchains for security, privacy, and verification seems difficult since the ecosystem is decentralized, and there’s no central authority to endorse it.
At the same time, the newness of blockchain technology makes it difficult to invest and conduct research around it. For example, the Ethereum blockchain started with the proof of work consensus mechanism but switched to proof of stake after a few years, through which it could become more efficient.
Therefore, blockchain technology requires a lot of trial and error to become trustworthy and stable. Establishing safety standards and having backup plans are important, even for decentralized networks.
So, how should companies approach the matter?
Many businesses want to steal the start and use blockchain to be ahead of the competition. However, they’re faced with numerous impediments, from the lack of regulation to the need to implement new standards.
Until now, several companies from main world industries have been working with blockchain technology:
- Bank and Finance: VISA took three years to enable a B2B payment service based on blockchain;
- Supply chain: Walmart uses IBM’s Hyperledger Fabric blockchain solution;
- Healthcare: the FDA uses blockchain to secure clinical trials and other healthcare-related data;
- Travel: Lufthansa developed the Blockchain for Aviation (BC4A) initiative);
Therefore, companies have either taken the matter into their own hands by creating something new to spread awareness about blockchain or worked with blockchain-based solutions to improve their services. For now, blockchains like the Hyperledger Fabric seem more approachable since they’re behind IBM ―a trusted worldwide competitor.
Blockchain awareness can be the solution to acceptance and adoption
The best method of making blockchain more approachable at the moment is to spread awareness on the subject. If more digital users learn about its benefits and companies find ways to use it, blockchain can be easily introduced into our traditional systems.
Social media is a powerful tool for discussing blockchain technology and breaking it down into bite-sized information pieces so more people can understand it. Crypto influencers and geeks only have to do thorough research before creating their own posts because the blockchain industry is pretty stuffed with data.
On the other hand, businesses could start experimenting with blockchain functionalities. PayPal, for example, collaborated with Ethereum developers for some time until offering customers the option to transfer crypto between their PayPal and digital wallets.
What about the legal framework?
The biggest challenge of adopting blockchain is the lack of support from official regulators. Since there’s no central authority on blockchain, adapting it after our regular frameworks is difficult. It took US SEC regulators to agree on Bitcoin’s classification as a commodity, so there’s a starting point somewhere.
Considering that blockchain alternatives include centralized databases, cloud storage, and centralized ledgers, which are easily approachable, decentralized ledgers have a long way to go before they can be freely used.
Several directives for centralized databases, for example, tackle copyright protection and property rights and guide users toward extracting or reusing data, which might be difficult on the blockchain. Depending on its nature, whether natural or private, information may or may not be accessible.
Is blockchain the future of our systems?
Blockchain is considered to be part of the Web3 world, in which decentralization, transparency, and immutability will rule over databases and make our lives easier. While some aspects of Web3 are already here, including immersive experiences, others will have to wait for users to catch up with the digital revolution.
Companies could contribute to the rapid adoption of blockchain by increasing their interest in experimenting with it. Trying different ways to approach it and use it legally under every country’s regulation will help them stay ahead of the competition, as they’ll already have the necessary expertise to employ blockchain ahead of other businesses.
What do you think about blockchain?
Blockchain technology is a revolutionary solution to several problems in our world. It can better secure data and offer enhanced transparency and security, so it could be a game-changer for all enterprises that use data for innovation. However, using it is challenging due to the knowledge and talent gap and the lack of regulation. Therefore, companies could experiment with it for now and learn more about it.
