The Medici account management book, developed in the 16th century, greatly promoted European economic growth. Today, blockchain has the potential to usher in a new global digital renaissance that will transform the financial services sector, supply chains, healthcare, backend offices, and more.
We showed the conditions under which blockchain could become a potential disruptor for several industries. Where are the risks and opportunities of this concept today?
- The greatest innovations in this technology are undoubtedly democratization and decentralized data storage, which creates trust between two unknown parties on the Internet – without any trustworthy middleman.
- Blockchain innovations like tokenization and fractionation of ownership of assets could open access to illiquid assets and make over-the-counter assets accessible to a wider audience.
- The blockchain could completely change the way back offices work within the financial industry. In addition, blockchain could facilitate data mining of consumer data – an application important for marketing financial and other services.
- But blockchain-based money is reaching its limits. Current blockchain technology processes around five transactions per second, while credit cards can handle over 1,500 transactions per second. Many experts believe that further, gaping gaps in transaction processing would open up and expose the downside of the attractive and more secure blockchain platform.
- China is making great strides in converting its local currency, the Renminbi, to the Central Bank Digital Currency (CBDC). CBDCs enable better fraud or crime prevention, instant international transactions, lower transaction costs, create the framework for greater financial inclusion, and help provide direct financial incentives to citizens. China’s CBDC could accelerate the decline of the US dollar as the world’s leading reserve currency.
- When it comes to blockchain infrastructure and security, the US is lagging behind China. President Joe Biden’s proposals regarding the infrastructure relate, among other things, to securing the blockchain infrastructure in the USA.
- The history of the blockchain may sound familiar; in its development and its cycles, it resembles that of the Internet. Critics have dismissed both technologies, but both have the potential to unleash seemingly limitless innovations.