Demystifying Blockchain: Abhijit Singh, Lead – Strategic Initiatives, Blockchain, ICICI Bank
By Abhijit Singh, Lead – Strategic Initiatives, Blockchain, ICICI Bank
Blockchain technology has been growing and evolving, since early 2009. What was once thought of as a fad, is now on the brink of changing technology in a historically significant perspective. Just like Pong started the whole video gaming industry, spurring technology advances that have changed our lives forever, so has blockchain, as it continues to evolve into something much more than what it started out as.
In the beginning, blockchain was merely deemed as the technology supporting Bitcoin. This eventually evolved into:
- Decentralisation of financial transactions
- Decentralisation of data/information storage using a distributed, decentralised database
- Eliminated to an extent the need for “trusted” third parties to verify transactions
- Introduced the Proof of Work Consensus Method, which is what makes blockchain unique as it combines computational processing power through the use of nodes connected to the network. These nodes verify all transactions and secure a public ledger.
With the momentum shifting from “exploring blockchain” to “using it practically in applications,” blockchain has come a long way. Today, digital enterprises are incorporating digital into their existing operations and protocols.
Blockchain is a sophisticated ledger system, with versatile nature, which helps record financial transactions, store records, or even track the flow of goods, information, and payments through a supply chain. While it provides more security and anonymity, blockchain needs pairing with a solid use case where it can serve as a sort of Trust-as-a-Service (TaaS) to participant systems. Meaning, it’s a business model enabler than a technology.
Vis-à-vis the development of the Internet before it, blockchain is still, in many ways, on a lookout for solid footing outside of its early adopters. While blockchain use cases today may be moving into production at this point in time, there is an absolute gold rush of ideas out in the marketplace. Big thinkers have been continuously coming up with new ideas of how blockchain can be leveraged across their organisations.
Blockchain as a service has been deemed an erstwhile cause for disruption. Many entrants in the services industry are already working with blockchain. The array of benefits of blockchain, such as: end-to-end encryption (more secure), high availability, good performance (relative to use cases being attempted), integrity, decentralized file storage network and other cutting-edge advances are luring companies to give it a serious consideration, to leverage into its offered benefits. Emerging disruptors have already been building distributed cloud storage provider, new transaction types, new models for deployment and management, cryptography services to offer a glimpse of “What Blockchain holds for our Future?”
After years of belief that blockchain is a fad and something of a curiosity, the financial services sector has now begun to expand its view of blockchain with considerations for both its pros and cons. There has been a shift within financial services from efficiency and cost savings towards a broader portfolio of blockchain applications designed to include new revenue streams.
At a practical level, decentralised and distributed ledger technologies have begun fundamentally redesigning the ways in which financial institutions interact with each other, regulators, and their customers. In the past, use cases for blockchain technology in financial services included trade finance, customer on-boarding, regulatory reporting, and cross-border payments. The future may envision – Identity and access management, loyalty programs, securities-lending services, and others making their way onto the stage.
The blockchain application for Trade Finance built by ICICI Bank digitizes the paper-intensive trade finance process as an electronic, distributed and unalterable ledger, and gives the participating entities, including banks, the ability to access a single source of information. It enables all the parties – buyers and sellers – to view the data in real-time. It allows them to track documentation and authenticate ownership of assets digitally and execute a trade finance transaction through a series of encrypted and secure digital contracts. Further, it allows each participant to check online the status of the application and transmission of original trade documents through a secure network.
Amalgamation of technologies like artificial intelligence, IoT and blockchain will offer a great momentum to the banks in the future.
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