Today, everyone seems to be "inside" Blockchain and the next cycle of hype will be focused on the blockchain! But what is blockchain and where is it applicable?
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Blockchain is often considered synonymous with cryptocurrency, while its applicability is perceived as limited to financial transactions. And, Trade Finance is considered the greatest prospect for the same.
However, I'm sure everyone understands that Blockchain has more! Although it is a simple concept, its implications are immense.
In fact, some ministries are considering the idea of exploiting the blockchain for purposes such as validation of Land and other registers. For example, UAEs have a 2021 blockchain vision and strategy for validating and authenticating transactions. The state of New York has offered a "BitLicense", which allows companies to conduct virtual currency operations on a DLT (Distributed Ledger Technology or blockchain) infrastructure. The Australian government also offered start-ups the facilities to further develop their blockchain initiatives. Likewise, in India, technology is adopted in commercial banks and research institutes. These institutions have adopted DLT-based solutions for trade finance and cross-border remittances.
To better understand, let's take the example of the KYC process. Almost all organizations invest millions in Tele and Field Verification to obtain KYC law. However, this process can easily be converted into a blockchain.
Therefore, the concept of KYC will be revolutionized with the use of blockchain. With blockchain, the client will be able to upload the required documents for his identity and address to a central site and the hash algorithms will be generated to store them securely.
The bank that wishes on board of this customer will then send a request to the central nodal agency for the documents. Together with the documents, the entire block of checks and validations will be sent to the bank. At each validation, in multiple domains and agencies, the chain is strengthened and authentication is addressed.
The solution will eliminate problems related to the current approach to KYC and will provide the following stack of functionality:
An immutable and secure database to maintain integrity, accessibility and accountability
Access based on permissions to information, which will allow data to be available only to accredited organizations
Reduction of processing costs with automation
Simplified processes that allow customers to deliver banks, companies, etc. more quickly.
Reduce the risks of fraud and operational errors
Thus, Blockchain has enormous potential for interruption. In the coming years, it can be used to create new business models, reduce risk and revolutionize compliance. However, large-scale adoption will take time as the technology is still being tested and the use cases are implemented gradually, on a small scale. The break of the blockchain is underway, and it is up to us to seize it.