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Let’s begin this conversation focusing on the fundamental aspect, i.e. by ‘Defining Blockchain.’ “Blockchain is a shared ledger technology that allows participants in the business network to transact assets; wherein everyone has control, but no one is in control.”
Being a truly ingenious invention, blockchain has the capability to change the fundamentals of the business processes. The technology can help streamline business processes and reduce the resistance between people involved in the exchange of information. Blockchain uses a validated, shared ledger to guarantee the quality and origin of information and smart contracts to execute business agreements automatically.
The traditional business model has centralized systems; wherein all the data is stored in a single place. This is where the blockchain comes into the picture as it is decentralized, immutable, and transparent. So, everything is now under the same network and is available based on the visibility that is provided to any particular user on the network. As we talk about the benefits of blockchain, which includes transparency, privacy comes into the picture. To address this issue, blockchain offers the concept of a smart contract wherein it helps businesses to exchange information directly with the relevant parties without any third party (intermediary) involvement. Thus, blockchain is creating extraordinary opportunities for business in new ways by reducing risk and uncertainties, thereby enhancing transparency under decentralized ledger.
However, this does not mean that blockchain limitations do not exist. Difficulties in interoperability, customer unfamiliarity, closed user experience, lack of intra ledger and intra ledger government are some of them. To add to this lack of, hardened attested technology, limitation of smart contract code programming model, wallet and key management, finding topnotch skills in accordance with changing landscape, scalability and lack of trust on premium technology suppliers also pose as a challenge towards the adoption this technology.
Although blockchain keeps data security, blockchain security risks do exist, and they must be recognized and mitigated. Risks such as legal jurisdictional barriers, politics and technology failures, institutional adaption barriers, ledger conflicts competition, and risk associated with core governance risks are the prominent ones. Now having discussed the existing threats, let’s focus on the ways that we can mitigate the weaknesses and threats.
We need to work with supplier partners and blockchain development platforms to mitigate technology-based threats. On legal considerations use blockchain technology that complies with legal requirements and behaviors such as data protection, consumer protection, and anti-money laundering for large companies and regulatory entities. We want to ensure the participants should be limited to those who can legally transact, ensure compliance with applicable laws and regulations, and manage data sensitive issues and risk of breach across borders.
These days, the trend in business processes is unquestionably moving away from slow, manual methods and toward greater automation and centralization to reap tremendous benefits. We can use blockchain smart contracts and IoT to automate business processes fully and manage new technology implanted in the process. There is a need for global technology standardization, and we need to ensure that as we develop different blockchain network, and that we get the common standards that the developers of blockchain can utilize. This, in turn, will make many different technologies more interoperable. For this to happen, the businesses have to be ready, and that is where we are going to be having the most difficulty. Because when we develop blockchain applications, they cannot be isolated, they have to interact with the entire landscape and need to be integrated into the larger ecosystem. Thus, we need to decide what we want to achieve. For instance, start eliminating barriers to digitalization, uncertain practices, rules and regulations, and come up with minimum standards. Because clearly defined goals can accelerate and allow all stakeholders to connect to the digital platform.